According to the quantity theory, if constant growth in the money supply is combined with fluctuating velocity, which of the following is most likely to result?
A. unpredictable rises and falls in nominal GDP
B. monetary policy will become inevitably imprecise
C. quantity of credit rises above where it otherwise be
D. innovations relating to banking and finance
Answer:A
According to the quantity theory, if constant growth in the money supply is combined with fluctuating velocity, which of the following is most likely to result?
A. unpredictable rises and falls in nominal GDP B. monetary policy will become inevitably imprecise C. quantity of credit rises above where it otherwise be D. innovations relating to banking and finance
Explanation: Type: Multiple Choice Category: Analyze