Since changes in $$\vec { C }$$ , $$\vec { I }$$ , $$\vec G$$ ,or $$\overrightarrow { N X }$$ do not change the rate of inflation in the long run,sustained inflation requires ongoing increases in the money supply.

Question

Quizplus · Accepted Answer

According to the quantity theory of money, sustained inflation in the long run is caused by increases in the money supply. Changes in factors such as real consumption ($$\vec{C}$$), real investment ($$\vec{I}$$), government spending ($$\vec{G}$$), or net exports ($$\overrightarrow{NX}$$) may impact inflation in the short run, but they do not have a sustained effect in the long run. Therefore, ongoing increases in the money supply are necessary to sustain inflation.

Since Changes In C⃗\vec { C }C I⃗\vec { I }I

Since Changes In $\vec { C }$ $\vec { I }$