According to the Quantity Theory of Money,if the Money Supply

question 129

Multiple Choice

According to the quantity theory of money,if the money supply grows at 6%,real GDP grows at 2%,and the velocity of money is constant,then the inflation rate will be

• A)8%.
• B)6%.
• C)4%.
• D)2%.

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Definitions:

Invisible Hand Principle

An economic theory proposed by Adam Smith, suggesting that individuals' pursuit of self-interest in free markets leads to economic prosperity and efficiency as if guided by an invisible hand.

Market Prices

The current value at which goods and services are bought and sold in the market, determined by supply and demand forces.

Economic Well-being

A broad measure of prosperity among individuals or nations, incorporating income, employment, and access to resources and services conducive to a high quality of life.

Market Economy

An economic system where supply and demand from consumers and businesses dictate the production and pricing of goods and services.