According to the quantity theory of money and prices,a 10 percent increase in the money supply ultimately leads to

Question

Quizplus · Accepted Answer

According to the quantity theory of money and prices, an increase in the money supply leads to a proportional increase in prices. Therefore, a 10 percent increase in the money supply ultimately leads to a 10 percent increase in the price level. This theory assumes that the velocity of money and real output remain constant.

According to the Quantity Theory of Money and Prices,a 10