Using the Quantity Theory of Money, in the Long Run

question 94

Multiple Choice

Using the quantity theory of money, in the long run a 3 percent increase in the quantity of money leads to a 3 percent

• A) increase in the price level.
• B) increase in the real interest rate.
• C) decrease in the price level.
• D) decrease in the real interest rate.
• E) increase in real GDP.

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Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period of time, often measured by GDP.

Simon Kuznets

Simon Kuznets was a Nobel Prize-winning economist known for his work on economic growth and for developing the concept of Gross National Product (GNP).

Quality of Inputs

The standard or grade of raw materials and labor used in the production process, influencing the efficiency and outputs.

Standard of Living

A measure of the wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.