Asked by Cassandra Barrios on Jul 27, 2024
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What two key assumptions does the quantity theory make concerning variables in the equation of exchange?
Quantity Theory
A theory in economics that argues the general price level of goods and services is directly proportional to the amount of money in circulation.
Equation of Exchange
An economic equation that relates the quantity of money, its velocity, and the price level of goods and services to the nominal value of transactions.
- Grasp the key assumptions of the quantity theory of money.
Verified Answer
ZK
Learning Objectives
- Grasp the key assumptions of the quantity theory of money.