Which of the following statements is consistent with the quantity theory of money?
A)Monetary policy should be used in the short run to try to steer the economy.
B)The money supply should be increased by a percentage to allow for changes in productivity and growth, but that percentage cannot be determined.
C)Expansionary monetary policy is the only way to prevent a mild recession from developing into a serious recession or depression.
D)A prescribed monetary policy should be followed regardless of what's happening in the economy.

Question

Quizplus · Accepted Answer

The quantity theory of money suggests that there is a direct relationship between the quantity of money in an economy and the level of prices of goods and services sold. It implies that monetary policy should not necessarily react to short-term economic fluctuations but rather follow a predictable, prescribed path, which aligns with option D.

Which of the Following Statements Is Consistent with the Quantity