During hyperinflation,because real GDP and the velocity of money can be assumed to be constant,the rate of ________ equals the rate of ________.
A) growth of the money supply;growth of real GDP
B) growth of consumption;inflation
C) growth of the money supply;inflation
D) growth of consumption;growth of real GDP
E) growth of real GDP;change of the exchange rate

Question

Quizplus · Accepted Answer

During hyperinflation, the real GDP and velocity of money are assumed to be constant. Therefore, according to the quantity theory of money, the rate of inflation is directly proportional to the rate of growth of the money supply. Hence, the rate of growth of the money supply equals the rate of inflation.

During Hyperinflation,because Real GDP and the Velocity of Money Can