The Quantity Theory of Money Along with the Assumption of a Constant

question 5

Multiple Choice

The quantity theory of money along with the assumption of a constant velocity can explain which of the following?

• A) At a given level of money growth, the higher the level of real growth the higher the level of inflation will be.
• B) At a given level of money growth, the higher the level of real growth the lower the level of inflation will be.
• C) If real growth is higher than money growth, the price level must be rising.
• D) If real growth equals money growth, the price level is falling.

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Definitions:

Individualistic

Pertaining to a social theory favoring freedom of action for individuals over collective or state control.

Collectivistic

A social pattern where individuals prioritize the needs and goals of the group over personal desires or ambitions.

Communalist

A person who advocates or practices communal living or shares a belief in the benefits of communal ownership and control.

Fascist

Describes an authoritarian and nationalistic right-wing system of government and social organization.