According to the Assumptions of the Quantity Theory of Money

question 129

Multiple Choice

According to the assumptions of the quantity theory of money, if the money supply decreases by 4 percent, then

• A)nominal and real GDP would fall by 4 percent.
• B)nominal GDP would fall by 4 percent; real GDP would be unchanged.
• C)nominal GDP would be unchanged; real GDP would fall by 0.40 percent.
• D)neither nominal GDP nor real GDP would change.

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Definitions:

Statute of Frauds

a legal principle that requires certain types of contracts to be written and signed by the party being charged with the obligation to be enforceable.

One-Year Provision

A legal principle that requires certain contracts, such as those that cannot be fulfilled within one year, to be in writing to be enforceable.

Contract Comes into Existence

The point at which an agreement between two or more parties is legally enforceable, usually triggered by an offer, acceptance, and adequate consideration.

Specific Performance

A legal remedy requiring a party to fulfill their obligations under a contract, rather than providing monetary compensation for failing to do so.