According to the quantity theory,what causes inflation in the long run?
A) unemployment
B) unexpected inflation
C) money supply growth
D) aggregate demand shocks

Question

Quizplus · Accepted Answer

According to the quantity theory of money, the long-run cause of inflation is the growth rate of the money supply. This theory assumes that changes in the money supply are the primary determinant of changes in the price level. When the money supply grows faster than the supply of goods and services, the result is inflation. Therefore, C is the correct answer.

According to the Quantity Theory,what Causes Inflation in the Long