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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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