Author Question: According to the quantity theory of money, if velocity of money is constant, a 5 percent increase in ... (Read 186 times)

fagboi · **on:** Jun 30, 2018

According to the quantity theory of money, if velocity of money is constant, a 5 percent increase in money supply will lead to a 0.25 percent increase in nominal GDP.
a. True
b. False
Indicate whether the statement is true or false

Question 2

The quantity theory of money assumes that money supply and price level are the only variables in the equation of exchange that are free to fluctuate.
a. True
b. False
Indicate whether the statement is true or false