Using average rates of money growth and inflation in the United States over many decades, Friedman and Schwartz found that decades of high money growth tended to have ______ rates of inflation and decades of low money growth tended to have ______ rates of inflation.
A) high; high
B) high; low
C) low; low
D) low; high

Question

Quizplus · Accepted Answer

Friedman and Schwartz, through their empirical research, demonstrated a direct relationship between the rate of money growth and the rate of inflation. Specifically, they found that periods of high money growth were associated with high rates of inflation, while periods of low money growth were associated with low rates of inflation. This finding supports the quantity theory of money, which posits that an increase in the money supply, if not matched by an increase in production, leads to inflation.

Using Average Rates of Money Growth and Inflation in the United