The quantity theory of money ________.
A)is formulated in terms of aggregate output because the nominal value of transactions is difficult to measure
B)tells us how much money is held for a given amount of nominal spending
C)implicitly tells us the quantity of money that people want to hold
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The quantity theory of money refers to the relationship between the quantity of money in an economy and the level of prices of goods and services produced in that economy. It is formulated in terms of aggregate output, as the nominal value of transactions is difficult to measure. It also implicitly tells us the quantity of money that people want to hold, as excessive or deficient money supply can lead to changes in output and price levels. Therefore, all the given options are correct.

The Quantity Theory of Money ________