Corby 9: Marg Rev Quantity Theory of Money

The quantity theory of money can be expressed as

• M x V = P x Y

• MV = P

• M/V x P/Y

• M = P x Y x V

Both sides of the quantity theory of money identity represent ____________. *

• Real GDP

• Nominal GDP

• Inflation

• The Money Supply

In the quantity theory of money, V represents:

• Velocity of a dollar

• The value of a dollar

• The value of all goods produced

• The velocity of production

In the quantity theory of money, P and Y represent the price and quantity of:

• all raw materials and natural resources sold in an economy

• all financial services sold in an economy

• all durable capital (tractors, manufacturing equipment) purchased in the economy

• all finished goods and services sold in an economy

Nominal GDP in terms of _______ is represented by how much money there is and how many times it is spent, while Nominal GDP in terms of ________ is represented by all goods and services and their prices

• buyers & sellers.

• domestic production & international production.

• profit & loss.

• imports & exports.

A change in which variable in the quantity theory of money is most likely to cause large and sustained changes in prices?

• Y, the real GDP.

• V, velocity of money

• M, the money supply

• None of these

The growth rate in prices is also called:

• Inflation

• escalation

• GDP spread

• the velocity of prices

The phrase that “money is neutral in the long run,” means:

• In the long run changes in the money supply do not directly affect GDP

• after enough time, money is worthless

• currency exchange rates are always fluctuating

• money is just a middle-man for the barter system

Who said 'Inflation is always and everywhere a monetary phenomenom'?

• Bart Simpson

• Milton Friedman

• Milton Keynes

• Milton Mowbray