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    Question

    According to the Quantity Theory of Money (QTM), what is

    the predicted effect of a change in the velocity of money on the price level in the long run?
    A An increase in the velocity of money leads to a proportional increase in the price level, with output remaining unchanged. Correct Answer Incorrect Answer
    B An increase in the velocity of money leads to a proportional decrease in the price level, with output remaining unchanged. Correct Answer Incorrect Answer
    C An increase in the velocity of money leads to a decrease in both the price level and output in the long run. Correct Answer Incorrect Answer
    D An increase in the velocity of money has no effect on the price level or output in the long run. Correct Answer Incorrect Answer

    Solution

    The correct answer is A

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