Question

Which of the following statements is NOT correct in the context of quantity theory of money?

Q: Answer-Which of the following statements is NOT correct in the context of quantity theory of money?

According to the quantity theory of money, the quantity of money available determines the price level in the economy and the growth rate in the quantity of money available determines the inflation rate in the economy. Moreover, because money is neutral, the economys output is determined by factor supplies and technology . However, it is not necessary for the velocity of money to increase with the increase in the quantity of money.

A The quantity of money available determines the price level in the economy

B The growth rate in the quantity of money available determines the inflation rate in the economy

C The velocity of money must rise with the increase in the quantity of money in the economy

D The economy’s output is determined by factor supplies and technology, because money is neutral

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Which of the following statements is NOT correct in the context of quantity theory of money?

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