Markus believes that in the long run, the average price level will increase at a rate that is consistent with the rate of increase in the money supply. Economists would say that Markus believes in the:
A) equation theory of money.
B) proportional monetary price theory.
C) money supply theory.
D) quantity theory of money.

Question

Quizplus · Accepted Answer

Markus's belief aligns with the quantity theory of money, which posits that the general price level of goods and services is directly proportional to the amount of money in circulation, or money supply.

Markus Believes That in the Long Run, the Average Price