According to crude versions of the quantity theory of money

Question

Quizplus · Accepted Answer

According to the crude version of the quantity theory of money, a 10-percent increase in the money supply will result in a 10-percent increase in the price level. This is known as the equation of exchange, which states that MV=PY, where M is the money supply, V is the income velocity of money, P is the price level, and Y is the real output. This assumes that velocity is relatively stable in the short run, and that there is full employment in the economy. Therefore, choice C is the best answer.

According to Crude Versions of the Quantity Theory of Money