Read the following statements and determine if they are true or false.
I. According to the quantity theory of money, an increase in the growth rate of the quantity of mo increases inflation in the long run.
II. Historical and international data show that there is no correlation between inflation and money growth.
A) I and II are both true.
B) I is true and II is false.
C) I is false and II is true.
D) I and II are both false.

Question

Quizplus · Accepted Answer

Statement I is true as the quantity theory of money states that inflation is directly proportional to the growth rate of the money supply. 
However, statement II is false as there is, in fact, a positive correlation between inflation and the growth rate of money supply based on historical and international data. Therefore, the answer is B.

Read the Following Statements and Determine If They Are True