When the rate of monetary growth is less than the rate of growth of real GDP,most likely in the long run

Question

Quizplus · Accepted Answer

According to the Quantity Theory of Money, in the long run, the price level is directly proportional to the money supply and inversely proportional to the real GDP. If the rate of monetary growth is less than the rate of growth of real GDP, it means that there is less money chasing relatively more goods and services, which will cause a tendency for the average price level to decrease over time.

When the Rate of Monetary Growth Is Less Than the Rate