Asked by Student Taylor Leveille on Jul 14, 2024
Verified
The quantity theory of money states that increases in the money supply result in proportional increases in real GDP.
Quantity Theory of Money
An economic theory that relates the money supply to the level of prices and the rate of inflation, proposing that changes in the money supply will directly affect price levels in the economy.
Money Supply
The aggregate volume of currency and liquid instruments circulating within an economy, crucial for determining inflation rates and monetary policy.
Real GDP
The measure of a country's economic output adjusted for price changes or inflation.
- Comprehend the fundamental tenets of the quantity theory of money and their effects on nominal GDP and real GDP.
Verified Answer
VS
Vince SandersJul 16, 2024
Final Answer :
False
Explanation :
The quantity theory of money states that increases in the money supply lead to an increase in prices, not necessarily an increase in real GDP.
Learning Objectives
- Comprehend the fundamental tenets of the quantity theory of money and their effects on nominal GDP and real GDP.