Continuous rapid growth of the money supply relative to the growth of real output will most likely lead to
A) persistent inflation.
B) low nominal interest rates.
C) high rates of real economic growth.
D) low unemployment.

Question

Quizplus · Accepted Answer

When the growth of the money supply outpaces real output, the demand for goods and services increases relative to their supply, leading to inflation. This is due to an increase in the amount of money chasing a limited amount of goods and services, leading to a decrease in the purchasing power of money.

Continuous Rapid Growth of the Money Supply Relative to the Growth