According to the Quantity Theory of Money, an Increase in GDP

question 33

Multiple Choice

According to the quantity theory of money, an increase in GDP ________ inflation, and the Phillips curve demonstrates that inflation ________ with rising GDP. This is because the quantity theory is a ________ theory of price behavior.

• A) reduces; increases; long-run
• B) raises; decreases; short-run
• C) has zero influence on; decreases; money-neutral
• D) raises; increases; short-run
• E) reduces; does not move; Keynesian

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Definitions:

Excess of Revenue

The amount by which revenue exceeds the expenses in a given period, indicating profit.

Expenses Incurred

Costs that a company has become legally obligated to pay, often in the course of its normal business operations.

Capital

Financial assets or the financial value of assets, such as cash and securities, owned by an individual or organization, especially those used to start or operate a business.

Market Value

The current quoted price at which an asset or service can be bought or sold in a public marketplace.