During the 1970's, U.S. inflation averaged 7% each year and real GDP increased. Holding velocity constant and using the Quantity Equation, we conclude that

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The Quantity Equation can be written as MV = PY, where M is the money supply, V is the velocity of money (how often money changes hands), P is the price level, and Y is real GDP. Holding velocity constant, we can see that an increase in the price level (inflation) must be due to an increase in the money supply. Since inflation averaged 7% each year and real GDP increased, money growth must have been greater than the growth of real income.