The Equation of Exchange Suggests That If the Velocity of Money

question 114

Multiple Choice

The equation of exchange suggests that if the velocity of money and the quantity of goods and services are held constant, a(n)

• A) decrease in the money supply will increase the price level.
• B) increase in the money supply will decrease the price level.
• C) increase in the money supply will increase the price level.
• D) decrease in the money supply will have no effect on the price level.

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