The quantity theory of money predicts that,in the long run,inflation results from the

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The quantity theory of money states that the level of prices in an economy is directly proportional to the money supply in that economy, assuming that velocity (or the rate at which money changes hands in the economy) and real output (or the number of goods and services produced in the economy) remain constant. Therefore, if the money supply is growing at a faster rate than real GDP, then the predicted result is inflation.

The Quantity Theory of Money Predicts That,in the Long Run,inflation