According to the quantity theory of money, in the long run
A) the quantity of money in a society will always be just the right amount.
B) an increase in the quantity of money creates an increase in prices but no additional increase in real GDP.
C) an increase in the quantity of money creates an increase in real GDP.
D) None of the above answers are correct.

Question

Quizplus · Accepted Answer

According to the quantity theory of money, in the long run, an increase in the quantity of money creates an increase in prices but no additional increase in real GDP. This is because increases in the quantity of money lead to an increase in spending and demand, which in turn drives up prices, but does not increase production or output in the long run.

According to the Quantity Theory of Money, in the Long