The quantity theory of money ________.
A)is used by classical economist to explain how changes in the quantity of money lead to proportional changes in the price level
B)gives mathematical grounding for the view that a country's central bank determines the general price level through control of the money supply
C)implies that changes in the money supply have no long run impact on real variables
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The quantity theory of money is used by classical economists to explain how changes in the money supply lead to proportional changes in the price level, provides a mathematical basis for understanding how central banks can influence the general price level by controlling the money supply, and implies that changes in the money supply do not affect real variables like output or employment in the long run.

The Quantity Theory of Money ________