Multiple Choice
The velocity of money is 5, real GDP is 100 and the money supply is 100. According to the quantity theory of money, a 20 percent increase in the money supply causes a
A) 10 percent decrease in average prices.
B) 10 percent increase in average prices.
C) 5 percent decrease in real GDP.
D) 20 percent decrease in velocity.
E) 20 percent increase in average prices.
Correct Answer:
Verified
Correct Answer:
Verified
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