6 Questions
Which of the following converts the equation of exchange to the quantity theory of money?
Causation goes from money to prices
In the quantity theory of money, what is the assumption about the velocity of money?
It remains constant
How does the quantity theory of money view the relationship between real output and the money supply?
Real output is independent of the money supply
According to institutionally focused economists, what do increases in prices lead to?
Increases in real output
What do institutionally focused economists believe sets prices?
Market forces
What do increases in prices force government to do, according to institutionally focused economists?
Increase the money supply
Test your understanding of the quantity theory of money with this multiple select quiz. Choose the statements that accurately convert the equation of exchange to the quantity theory of money, covering concepts such as the velocity of money, causation between money and prices, and the impact of the money supply on real output.
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