The U.S. historical evidence
A) generally supports the quantity theory of money in the long run.
B) does not support the quantity theory of money.
C) demonstrates that there is no correlation between the money growth rate and inflation.
D) shows that a higher inflation rate causes an increase in the money growth rate.

Question

Quizplus · Accepted Answer

The quantity theory of money, which posits a direct relationship between the amount of money in an economy and the level of prices of goods and services, is generally supported by U.S. historical evidence in the long run. This evidence suggests that significant changes in the money supply are often associated with proportional changes in price levels over the long term.

The U.S. Historical Evidence