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Which of the Following Is True Regarding the Quantity Theory

question 361

Multiple Choice

Which of the following is true regarding the quantity theory of money?
I. The theory predicts that in the long run the inflation rate equals the money growth rate minus t growth rate of real GDP.
II. The theory predicts that countries with high growth rates of money will have high inflation rate
III. The theory predicts that increases in the growth rate of velocity lowers the inflation rate.


Definitions:

Private Goods

Goods that are excludable and rivalrous, meaning one person's consumption prevents another's and consuming the good diminishes its availability for others.

Common Resources

Resources that are accessible to all members of a community but are susceptible to overuse and depletion, such as air, water, and fish in the ocean.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning their use by one person does not reduce availability to others, often provided by the government.

Club Goods

Goods that are excludable but non-rivalrous, meaning access to the good can be limited by a fee or membership, but one person's use does not diminish availability to others.

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