According to the quantity theory of money, the major cause of inflation in the long run is an increase in
A) the standard of living.
B) the velocity of money.
C) the growth of real GDP.
D) the growth of the money supply.

Question

Quizplus · Accepted Answer

The quantity theory of money states that in the long run, the price level of goods and services is directly related to the amount of money in circulation. This means that a growth in the money supply will eventually lead to an increase in the general level of prices, or inflation. Therefore, the major cause of inflation in the long run is an increase in the growth of the money supply.

According to the Quantity Theory of Money, the Major Cause