According to the quantity theory of money, inflation is attributable to increases in:
A)velocity.
B)real GDP.
C)velocity in excess of increases in real GDP.
D)the money supply in excess of increases in real GDP.

Question

Quizplus · Accepted Answer

The quantity theory of money suggests that inflation is caused by the money supply increasing at a faster rate than real GDP. This theory posits that if the amount of money in an economy grows more rapidly than the economy's ability to produce goods and services, prices will rise to reflect the increased demand for a limited supply of goods, leading to inflation.

According to the Quantity Theory of Money, Inflation Is Attributable