According to the quantity theory of money, in the long run
A)V/M is constant.
B)Y/M is constant.
C)Y/P is constant.
D)M/P is constant.
E)M/V is constant.

Question

Quizplus · Accepted Answer

The quantity theory of money states that in the long run, the nominal value of output (Y) is proportional to the quantity of money in circulation (M) and inversely proportional to the general price level (P), or Y = f(M/P). Solving for P, we get P = M/Y, which implies that M/P is constant in the long run.

According to the Quantity Theory of Money, in the Long