If quantity of money increases 100%, other things remaining constant, value of money changes by:
A)Increases by 100%
B)Decreases by 100%
C)Decreases by 200%
D)Does not change

Question

Quizplus · Accepted Answer

When the quantity of money doubles (increases by 100%), the value of money, or its purchasing power, decreases. However, it does not decrease by 100% (which would imply it becomes worthless). The question seems to be aiming at the inverse relationship between the quantity of money and its value, but none of the provided options accurately describe the economic principle. The correct economic principle is that if the money supply increases, the value of money decreases, but not by a directly proportional percentage. The provided options do not accurately reflect how this relationship works in practice.

If Quantity of Money Increases 100%, Other Things Remaining Constant