The Quantity Theory of Money States That If the Velocity

question 57

Multiple Choice

The quantity theory of money states that if the velocity of money is stable or at least predictable,then:

• A)the quantity of money in circulation determines real GDP in the short run.
• B)the quantity of money in circulation determines aggregate spending.
• C)the quantity of money in circulation determines both real GDP and the price level in the long run.
• D)the quantity of money in circulation determines only the price level in the long run.
• E)the quantity of money in circulation determines the potential output in the long run.

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Definitions:

Consistent Behavioural Style

A pattern of behavior or actions that are uniform and predictable over time in similar situations.

Majority Norm

The standard or typical behaviors, attitudes, and beliefs adopted by the majority of members within a social group or society.

Pig-Headedness

A stubborn refusal to change one’s opinion or course of action, regardless of external arguments or evidence to the contrary.

Expressed Views

Opinions, thoughts, or beliefs that are communicated or made known.