The quantity theory of money suggests that a 20 percent decrease in the money supply causes a 20 percent decrease in nominal GDP.

Name: The quantity theory of money suggests that a 20 percent decrease in the money supply causes a 20 percent decrease in nominal GDP.
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The quantity theory of money, expressed by the equation MV = PY, implies that if the velocity of money (V) and real output (Y) are constant, a change in the money supply (M) leads to a proportional change in nominal GDP (PY).

The Quantity Theory of Money Suggests That a 20 Percent