Other things constant, the quantity theory of money concludes that any increase in the quantity of money
A) decreases the aggregate level of nominal income.
B) proportionally increases the price level.
C) decreases the demand for money.
D) decreases in the aggregate price level.

Question

Quizplus · Accepted Answer

The quantity theory of money concludes that there is a direct relationship between the quantity of money in circulation and the general price level. Therefore, an increase in the quantity of money would proportionally increase the price level, assuming other factors remain constant.

Other Things Constant, the Quantity Theory of Money Concludes That