In comparing growth rates of money growth and inflation across countries, the long-run proposition of the quantity theory of money is supported.

Question

Quizplus · Accepted Answer

The quantity theory of money suggests that in the long run, there is a direct relationship between the growth rate of money supply and the rate of inflation across countries. This means that if the money supply grows at a faster rate than the economy's ability to produce goods and services, inflation will increase, supporting the long-run proposition of the theory when comparing different countries.

In Comparing Growth Rates of Money Growth and Inflation Across