In the long run,the inflation rate depends primarily on money supply growth.

Question

Quizplus · Accepted Answer

The quantity theory of money states that the inflation rate is directly proportional to the growth rate of money supply in the long run. Therefore, the statement that the inflation rate depends primarily on money supply growth is true. However, other factors such as changes in demand, supply shocks, and government policies can also have an impact on inflation in the short run.

In the Long Run,the Inflation Rate Depends Primarily on Money