The quantity theory of money argues that, in the long run, the percentage change in money will create an equal percentage change in
A) velocity.
B) the price level.
C) potential GDP.
D) real GDP.

Question

Quizplus · Accepted Answer

According to the quantity theory of money, the level of prices is directly proportional to the amount of money in circulation. Therefore, any change in the quantity of money will bring an equal percentage change in the price level in the long run.

The Quantity Theory of Money Argues That, in the Long