Multiple Choice
The quantity theory of money begins with the equation of exchange, MV = PY, and then adds the assumptions that
A) velocity and the price level are independent of the quantity of money.
B) velocity and potential GDP are independent of the quantity of money.
C) velocity varies inversely with the interest rate, and the price level is independent of the quantity of money.
D) potential GDP and the price level are independent of the quantity of money.
E) potential GDP and the quantity of money are independent of the price level.
Correct Answer:
Verified
Correct Answer:
Verified
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