The Quantity Theory of Money Implies That the Price Level

question 51

Multiple Choice

The quantity theory of money implies that the price level will be stable (no inflation or deflation) when the growth rate of the money supply equals

• A)0.
• B)the growth rate of the price level.
• C)the growth rate of the velocity of money.
• D)the growth rate of real GDP.
• E)the growth rate of real GDP times the current price level.

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Definitions:

Gratuitous Promise

A vow or commitment to do something for someone else without expecting anything in return.

Breach of Contract

The act of breaking any terms and conditions that were mutually agreed upon in a legally enforceable contract.

Consideration

An item of worth traded between entities within a contract, essential for the contract to be considered enforceable by law.

Common Law

A body of law derived from judicial decisions of courts and similar tribunals, as opposed to statutes or official legislation.