Economics 9708 · AS & A Level · Price stability and inflation

Price stability and inflation — practice question

Which statement regarding the quantity theory of money is correct?

  • AIt suggests changes in liquidity preference lead to proportional changes in the price level.
  • BIt suggests changes in the money supply lead to proportional changes in the price level.
  • CIt suggests changes in the price level lead to proportional changes in liquidity preference.
  • DIt suggests changes in the price level lead to proportional changes in the money supply.

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