According to the quantity theory of money,a nation that increases its money supply by 30% should expect its price level to increase by approximately:
A) 15%.
B) 30%.
C) 45%.
D) 60%.

Question

Quizplus · Accepted Answer

The quantity theory of money states that the price level is proportional to the quantity of money in circulation, so if the money supply increases by 30%, the price level should increase by a similar amount, approximately 30%.

According to the Quantity Theory of Money,a Nation That Increases