Given the Strict Quantity Theory of Money, If the Quantity

question 180

Multiple Choice

Given the strict quantity theory of money, if the quantity of money were decreased by 50 percent, prices would

• A) fall by 50 percent.
• B) rise by 50 percent.
• C) increase by 100 percent.
• D) decrease by 100 percent.

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Definitions:

Fair Market Value

The cost at which a financial asset is exchanged between a ready buyer and a ready seller, where neither party is obligated to proceed with the transaction and both parties are well-informed of all pertinent information.

Noncurrent Assets

Long-term resources owned by a company, which are not expected to be converted into cash or used up within one year or the operational cycle, whichever is longer.

Liabilities

Financial obligations or debts owed by a business to others, that must be paid in the future.