During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. A likely explanation of these facts is that
A)the United Kingdom has a better education system than Turkey.
B)the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey.
C)workers in Turkey are more productive than workers in the United Kingdom.
D)there are more instances of market power in Turkey than in the United Kingdom.

Question

Quizplus · Accepted Answer

Inflation is often closely related to the rate at which the money supply grows. If the quantity of money grows slowly, as it likely did in the United Kingdom during the 1990s, inflation tends to be lower. Conversely, a rapid increase in the money supply, as possibly experienced by Turkey, can lead to higher inflation rates. The other options do not directly address the typical causes of inflation.

During the 1990s, the United Kingdom Experienced Low Levels of Inflation