If the growth rate of the money supply decreases from 10% to 5%,which of the following is a prediction of the quantity theory of money?
A) disinflation
B) deflation
C) hyperinflation
D) money illusion

Question

Quizplus · Accepted Answer

The quantity theory of money suggests that if the growth rate of the money supply decreases, it would lead to a slower rate of inflation, or disinflation, as there is less money chasing the same amount of goods and services.

If the Growth Rate of the Money Supply Decreases from 10