According to the Quantity Theory of Money, If an Economy

question 104

Multiple Choice

According to the quantity theory of money, if an economy produces 5,000 units of output, its money supply equals $40,000 and the velocity of money equals one, then the price level will equal:

• A) $0.13.
• B) $1.25.
• C) $8.
• D) $200.
• E) $8,000.

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