Which of the following is consistent with the idea that high money supply growth leads to high inflation?
A)The quantity theory and data from classic hyperinflations that occurred during the 1920s in Austria, Hungary, Germany, and Poland.
B)The quantity theory but not evidence from classic hyperinflations that occurred during the 1920s in Austria, Hungary, Germany, and Poland.
C)Evidence from classic hyperinflations that occurred during the 1920s in Austria, Hungary, Germany, and Poland but not the quantity theory.
D)Neither the quantity theory nor evidence from classic hyperinflations that occurred during the 1920s in Austria, Hungary, Germany, and Poland.

Question

Quizplus · Accepted Answer

The quantity theory of money, which posits a direct relationship between the amount of money in an economy and the level of prices of goods and services, supports the idea that high money supply growth leads to high inflation. This theory is further corroborated by historical data from classic hyperinflations in the 1920s in countries like Austria, Hungary, Germany, and Poland, where massive increases in the money supply led to extremely high inflation rates.

Which of the Following Is Consistent with the Idea That