According to the quantity theory of money, money growth and inflation are
A) independent, that is, not correlated.
B) negatively correlated.
C) positively if the inflation rate is positive and negatively correlated if the inflation rate is negative.
D) positively correlated.

Question

Quizplus · Accepted Answer

According to the quantity theory of money, money growth and inflation are positively correlated. This means that as the money supply increases, the general price level in the economy also increases, leading to inflation.

According to the Quantity Theory of Money, Money Growth and Inflation