The Essence of the Quantity Theory of Money Is That

question 63

Multiple Choice

The essence of the quantity theory of money is that:

• A) the price level is indeterminate.
• B) in the long run, the only determinant of the price level is the money supply.
• C) in the long run, a key determinant of the price level is the money supply.
• D) only the central bank knows what the price level is.
• E) money cannot pin down the price level.

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Definitions:

Deficit

A debit balance in the retained earnings account.

Retained Earnings

The portion of net earnings not distributed as dividends but retained by the company to reinvest in its core business or to pay debt.

Treasury Stock

Shares that were once issued and outstanding but were subsequently repurchased by the company, reducing the number of shares on the market.

Organizational Expenses

Costs related to the formation and operation of a business entity, such as legal fees, accounting services, and incorporation fees.