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Which of the Following Is TRUE Regarding the Quantity Theory

Question 357

Multiple Choice

Which of the following is TRUE regarding the quantity theory of money?
I. The theory predicts that in the long run the inflation rate equals the money growth rate minus the
Growth rate of real GDP.
II. The theory predicts that countries with high growth rates of money will have high inflation rates.
III. The theory predicts that increases in the growth rate of the velocity of circulation lowers the
Inflation rate.


A) I and II
B) II and III
C) I and III
D) I, II and III

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