Question

The quantity theory of money ________. tells us how much money is held for a given...

The quantity theory of money ________. tells us how much money is held for a given amount of nominal spending

is formulated in terms of aggregate output because the nominal value of transactions is difficult to measure

implicitly tells us the quantity of money that people want to hold

all of the above

none of the above

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Answer #1

The following equation is the equation of quantity theory of money.

M × V = P × Y.

The QTM states that how much money is held for a given amount of nominal spending. It is formulated in terms of nominal GDP ( aggregate output). Because QTM states that how much money is held for a given amount of nominal spending, it is also called a theory of money demand. So, implicitly QTM tells us the quantity of money that people want to hold.

So, the correct answer is "all of the above".

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