According to the Quantity Theory of Money, Deflation Will Occur

question 33

Multiple Choice

According to the quantity theory of money, deflation will occur if the

• A)money supply is less than real GDP.
• B)money supply is more than real GDP.
• C)money supply grows at a slower rate than real GDP.
• D)money supply grows at a faster rate than real GDP.
• E)the velocity of money grows at a faster rate than money supply.

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Definitions:

Paradigm

A body of knowledge that selects and highlights certain issues for study. It includes assumptions about how a particular phenomenon ought to be studied and the kinds of experimental methods and measures that are appropriate to use.

Assumptions

Beliefs or principles accepted as true without proof, often forming the basis for further reasoning or behavior.

Analogies

Cognitive processes that identify similarities between two different ideas or objects, facilitating understanding and problem-solving.

Natural Selection

The process by which biological traits become more or less common in a population due to consistent effects on the survival and reproduction of their bearers.