According to the quantity theory of money,the primary cause of inflation is:
A) the growth rate of the money supply.
B) the growth rate of real GDP.
C) productivity growth.
D) the number of real economic shocks.

Question

Quizplus · Accepted Answer

According to the quantity theory of money, inflation is primarily caused by the growth rate of the money supply. The theory suggests that if the money supply grows faster than the growth rate of real GDP, there will be too much money chasing too few goods and services, causing prices to increase.

According to the Quantity Theory of Money,the Primary Cause of Inflation