Quantity Theory of Money explains that:
A)Value of money depends upon quantity of money
B)Rate of interest depends upon quantity of money
C)Quantity of investment depends upon quantity of money
D)Supply of money depends upon quantity of money

Question

Quizplus · Accepted Answer

The Quantity Theory of Money posits that the value of money is inversely related to the quantity of money in the economy, meaning as the quantity of money increases, its value decreases, and vice versa. This theory primarily focuses on the relationship between the money supply and the price level rather than interest rates or investment quantities.

Quantity Theory of Money Explains That