According to the quantity theory of money, a 25 percent change in M, the quantity of money, leads to a 25 percent change in

Question

Quizplus · Accepted Answer

According to the quantity theory of money, MV=PQ, where M is the quantity of money, V is the velocity of circulation, P is the price level, and Q is the quantity of goods and services produced. Holding Q constant, a 25 percent increase in M will lead to a 25 percent increase in P. Therefore, the correct answer is C.

According to the Quantity Theory of Money, a 25 Percent