According to the Quantity Theory of Money, if the money supply increases while the velocity of money and output remain constant, the general price…

CA Foundation · Business Economics · MTP · January 2025
According to the Quantity Theory of Money, if the money supply increases while the velocity of money and output remain constant, the general price level will:
(A) A. Decrease
(B) B. Increase proportionately
(C) C. Stay the same
(D) D. Increase, but unpredictably

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Increase proportionately

Topics: Money Market

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