What does the fact that most countries' economies lie near the straight, slanting line in the graph below indicate?
A) Most countries exercise tight control over their money supplies.
B) The rate at which prices rise is closely tied to the rate of money supply expansion.
C) In most countries, the inflation rate is very low.
D) It is very difficult for a government to shift the inflation rate away from its natural level.
E) The size of the money supply is determined almost entirely by the movement of prices.

Question

What does the fact that most countries' economies lie near the straight, slanting line in the graph below indicate? 
A) Most countries exercise tight control over their money supplies. 
B) The rate at which prices rise is closely tied to the rate of money supply expansion. 
C) In most countries, the inflation rate is very low. 
D) It is very difficult for a government to shift the inflation rate away from its natural level. 
E) The size of the money supply is determined almost entirely by the movement of prices.

Quizplus · Accepted Answer

The fact that most countries' economies lie near the straight, slanting line on the graph indicates that there is a close relationship between the rate of money supply expansion and the rate at which prices rise (inflation). This suggests that most countries' central banks are able to exercise a significant degree of influence over inflation by controlling the money supply.

What Does the Fact That Most Countries' Economies Lie near the Straight