Given the Strict Quantity Theory of Money, If the Quantity

question 180

Multiple Choice

Given the strict quantity theory of money, if the quantity of money were decreased by 50 percent, prices would

• A) fall by 50 percent.
• B) rise by 50 percent.
• C) increase by 100 percent.
• D) decrease by 100 percent.

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Definitions:

Merchandise Inventory

The total value of a company's goods that are ready for sale but still in stock, representing a current asset on the balance sheet.

Accounts Payable

A liability in the form of amounts owed by a company to its creditors or suppliers for goods or services received.

Perpetual Inventory System

An inventory system that records changes in inventory levels after every transaction, ensuring continuous, real-time updates.

Accounts Payable

A liability account that records amounts owed by a company to suppliers or creditors for purchases made on credit.