The Quantity Theory of Money Begins with the Equation Containing

question 9

Multiple Choice

The quantity theory of money begins with the equation containing the money supply (M) , velocity of money (V) , average prices (P) and real GDP (Q) , and then assumes that

• A) M does not change when V changes.
• B) V does not change when Q changes.
• C) V is fixed and Q is fixed at potential GDP.
• D) V is fixed and Q is fixed at real GDP.
• E) V is fixed and Q is fixed at nominal GDP.

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