What does the fact that most countries' economies lie near the straight,slanting line in the graph below indicate?
A) Most countries exercise tight control over their money supplies.
B) The rate at which prices rise is closely tied to the rate of money supply expansion.
C) In most countries,the inflation rate is very low.
D) It is very difficult for a government to shift the inflation rate away from its natural level.
E) The size of the money supply is determined almost entirely by the movement of prices.

Question

What does the fact that most countries' economies lie near the straight,slanting line in the graph below indicate? 
A) Most countries exercise tight control over their money supplies. 
B) The rate at which prices rise is closely tied to the rate of money supply expansion. 
C) In most countries,the inflation rate is very low. 
D) It is very difficult for a government to shift the inflation rate away from its natural level. 
E) The size of the money supply is determined almost entirely by the movement of prices.

Quizplus · Accepted Answer

The slanting line in the graph represents the relationship between the rate of money supply expansion and the rate at which prices rise (inflation). Most countries' economies lie near this line, indicating that the two variables are closely tied. This suggests that changes in the money supply have a significant impact on inflation rates, and that most countries have relatively stable inflation rates that are driven by changes in the money supply.

What Does the Fact That Most Countries' Economies Lie near the Straight,slanting