According to the Quantity Theory of Money, in the Long

question 92

Multiple Choice

According to the quantity theory of money, in the long run

• A)V/M is constant.
• B)Y/M is constant.
• C)Y/P is constant.
• D)M/P is constant.
• E)M/V is constant.

---

Definitions:

Indifference Curve

A curve representing all combinations of goods and services among which a consumer is indifferent, showing the same level of satisfaction or utility.

Budget Line

A graphical representation of all possible combinations of two goods or services that can be purchased with a given income and prices, identical to the concept of a budget constraint but rephrased.

Duality

Alternative way of looking at the consumer’s utility maximization decision: Rather than choosing the highest indifference curve, given a budget constraint, the consumer chooses the lowest budget line that touches a given indifference curve.

Marginal Utilities

Refers to the additional satisfaction or utility that a consumer receives from consuming one more unit of a good or service.