Today, most economists agree with the monetarists that, in the long run, inflation is caused by
A) growth in the money supply.
B) people's expectations.
C) government borrowing.
D) high taxes.

Question

Quizplus · Accepted Answer

Most economists agree that inflation in the long run is primarily caused by an increase in the money supply. This is known as the quantity theory of money, which assumes that changes in the money supply are directly proportional to changes in the price level. When there is more money in the economy, people have more to spend, which leads to increased demand for goods and services. This results in higher prices and inflation.

Today, Most Economists Agree with the Monetarists That, in the Long