According to the Quantity Theory of Money, If an Economy

question 166

Multiple Choice

According to the quantity theory of money, if an economy produces 100 units of output and has a money supply equal to $500, then if the money supply doubles while velocity remains constant, the new price level will:

• A) fall to half its initial level.
• B) fall, but it will not fall all the way to half its initial level.
• C) increase, but it will not double.
• D) double.
• E) more than double.

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