The Quantity Theory of Money Is the Idea That in the Long

question 297

Multiple Choice

The quantity theory of money is the idea that in the long run

• A) the quantity of money serves as a good indicator of how well money functions as a store of value.
• B) an increase in the growth rate of the quantity of money leads to an equal increase in the inflation rate.
• C) the quantity of money is determined by banks.
• D) the quantity of money determines real GDP.

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Definitions:

Marginal Revenue Product

The extra income produced by using an additional unit of a resource, such as manpower or investment.

Going Wage

The prevailing wage level for a given job in a specific market or industry, often determined by the balance of supply and demand for labor.

Labor

The deployment of human physical and cognitive efforts towards the creation of goods and the provision of services.

Equilibrium Price

The cost at which the amount of a product consumers want to buy matches the amount that producers are willing to sell.