According to the Quantity Theory of Money (Chapter 3),the increase in the money supply from $39.7 billion in 1940 to $99.2 billion in 1945 should have fueled strong inflation.However,it ?did not because

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The Quantity Theory of Money asserts that an increase in money supply leads to inflation, assuming all else remains constant. However, in the case of the WWII economy, the economy was operating below full employment levels of production. This means that the increase in money supply did not lead to inflation as there was excess capacity and resources that could be utilized without affecting prices. Therefore, choice A is the best answer. Choice B and C are incorrect as they do not account for the impact of employment levels on inflation. Choice D is also incorrect as price controls were implemented to prevent rampant inflation, but they were not the sole reason for the absence of inflation.

According to the Quantity Theory of Money (Chapter 3),the Increase