The quantity theory of money ________.
A) is the product of Keynesian economists
B) links total income to a country's supply of money
C) explains why the equation of exchange is true by definition
D) all of the above
E) none of the above

Question

Quizplus · Accepted Answer

The quantity theory of money links total income to a country's supply of money. The theory suggests that an increase in the money supply will lead to a proportional increase in prices and nominal income in the economy. It is not the product of Keynesian economists nor does it simply explain the equation of exchange by definition.

The Quantity Theory of Money ________