If the Simple Quantity Theory of Money Predicts Well,what Would

question 24

Multiple Choice

If the simple quantity theory of money predicts well,what would we expect to see (in the real world) ?

• A) changes in the money supply strongly correlated with changes in interest rates
• B) changes in the money supply strongly correlated with changes in inflation rates
• C) changes in Real GDP strongly correlated with changes in the money supply
• D) changes in velocity strongly correlated with changes in the money supply
• E) none of the above

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Definitions:

Possible Obligation

A potential future outflow of resources embodying economic benefits, arising from past events, whose existence will be confirmed only by uncertain future events.

Uncertain Future Event

A potential occurrence or situation whose outcome cannot be predicted with certainty, often impacting planning and decision-making.

Economicbenefits

The potential to bring about advantages in terms of increased cash flows or reduced cash outflows, contributing to the value of an entity.

Bank Guarantee

A financial instrument provided by a bank on behalf of a client, ensuring payment to a beneficiary if the client fails to fulfill contractual obligations.