Asked by Kevin Patel on Jun 07, 2024
Verified
There is a(n) _______ relationship between the value of money and the quantity of money in circulation.
A) direct
B) inverse
C) unpredictable
Value of Money
The purchasing power of currency, indicating the amount of goods or services that can be bought with a unit of money.
Quantity of Money
The total amount of money available in an economy at a specific time, including cash, coins, and balances in bank accounts.
Circulation
In economics, circulation refers to the continuous movement and exchange of money or goods and services within an economy.
- Acquire insight into how changes in the supply of money affect price levels and genuine output in accordance with divergent economic doctrines.
Verified Answer
RC
Rachel CortesJun 07, 2024
Final Answer :
B
Explanation :
The relationship between the value of money and the quantity of money in circulation is an inverse relationship. As the quantity of money in circulation increases, the value of each unit of currency decreases. This is known as inflation. Conversely, as the quantity of money in circulation decreases, the value of each unit of currency increases. This is known as deflation.
Learning Objectives
- Acquire insight into how changes in the supply of money affect price levels and genuine output in accordance with divergent economic doctrines.