In the quantity theory of money,growth of _____ is the cause of inflation.
A) the money supply
B) velocity
C) real GDP
D) the CPI

Question

Quizplus · Accepted Answer

According to the quantity theory of money, inflation occurs when the money supply grows faster than the rate of real output growth. This is because an increase in the money supply causes an increase in demand for goods and services, leading to higher prices. Therefore, growth of the money supply is the cause of inflation in the quantity theory of money.

In the Quantity Theory of Money,growth of _____ Is the Cause