Actual historical data comparing changes in the money supply and price levels leads to the following observations of the Quantity Theory of Money: The theory is supported internationally, but not domestically. What does the Quantity Theory of Money state?
1) The theory states that there is a direct relationship between the money supply and price levels.
2) The theory states that there is an inverse relationship between the money supply and price levels.
3) The theory states that changes in the money supply have no impact on price levels.
4) The theory states that changes in price levels have no impact on the money supply.