According to the Monetarists, the primary cause of inflation is:
A) large budget deficits.
B) high taxes.
C) rapid expansion of the money supply.
D) government expenditures that are large relative to the size of the economy.

Question

Quizplus · Accepted Answer

According to Monetarists, inflation is primarily caused by rapid expansion of the money supply. When the supply of money in an economy grows faster than the production of goods and services, it results in too much money chasing too few goods, which leads to increases in prices. Large budget deficits, high taxes, and government expenditures that are large relative to the size of the economy are also factors that can contribute to inflation, but they are considered secondary causes by Monetarists.

According to the Monetarists, the Primary Cause of Inflation Is