The proposition that in the long run when real GDP equals potential GDP, an increase in the
Quantity of money leads to an equal percentage increase in the price level is the called the quantity
Theory of
A)money.
B)the long run.
C)constant velocity.
D)inflation.
E)equal change.

Question

Quizplus · Accepted Answer

The quantity theory of money states that in the long run, an increase in the money supply leads to a proportional increase in the price level, assuming velocity and output are constant.

The Proposition That in the Long Run When Real GDP