If the Velocity of Money and Real GDP Are Fixed

question 214

Multiple Choice

If the velocity of money and real GDP are fixed, then the quantity theory of money implies that the price level will:

• A) increase at a lower rate than the growth in the money supply.
• B) increase at the same rate as the growth in the money supply.
• C) increase at a higher rate than the growth in the money supply.
• D) be unrelated to the growth in the money supply.

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Definitions:

Masseter

A facial muscle that plays a major role in the chewing of food by elevating the mandible (lower jaw).

Extensor Hallicus Longus

A muscle in the leg that extends the big toe and aids in dorsiflexion of the foot.

Big Toe

The largest toe on the human foot, which plays a significant role in maintaining balance and walking.

Tibialis Anterior

A muscle in the lower leg that dorsiflexes and inverts the foot, playing an important role in walking and balance.