The Simple Quantity Theory of Money Predicts That If

question 12

Multiple Choice

The simple quantity theory of money predicts that if

• A) the money supply rises by $200,then GDP falls by $200.
• B) GDP rises by $400,then the money supply rises by $400.
• C) the money supply rises by 10 percent,then the price level rises by 10 percent.
• D) the money supply falls by $300,then GDP rises by $300.

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Definitions:

Jury

A group of people sworn to render a verdict or true answer on a question or questions officially submitted to them in a court of law.

Stamp Act

A British law enacted in 1765 requiring a tax in the form of a stamp to be paid on a wide array of documents and printed items in the American colonies.

Prime Minister

Refers to the head of government in many countries, typically the leader of the majority party in the legislature, who oversees the administration of government policies.

George Grenville

A British Whig statesman who served as Prime Minister of Great Britain from 1763 to 1765, known for his role in passing the Stamp Act, which contributed to the American Revolution.