The Quantity Theory of Money Assumes That the Velocity of Money

question 230

Multiple Choice

The quantity theory of money assumes that the velocity of money:

• A) increases with the quantity of money in the economy.
• B) decreases with the quantity of money in the economy.
• C) is relatively stable.
• D) is difficult to predict.

---

Definitions:

Marginal Rate of Substitution

The rate at which a consumer is willing to substitute one good for another while maintaining the same level of utility.

Marginal Utilities

The supplementary utility or satisfaction received by using one more unit of a good or service.

Lemonade

A sweetened beverage made from lemon juice, water, and sugar, often associated with simple entrepreneurial ventures like lemonade stands.

Popcorn

A type of corn kernel which expands and puffs up when heated, often consumed as a snack.