If you believe that velocity is constant and that the aggregate supply curve is vertical, then the quantity theory of money would predict that a doubling of the money supply would cause a doubling of

Question

Quizplus · Accepted Answer

The quantity theory of money, when assuming a constant velocity of money and a vertical aggregate supply curve (indicating no change in real output), predicts that doubling the money supply would double nominal output (prices) but leave real output unchanged. This is because the increase in money supply would lead to proportional inflation without affecting the actual production or real economy.

If You Believe That Velocity Is Constant and That the Aggregate