Decades of research around the world suggest a link in the _____
A) long run between sharp increases in the money supply and higher inflation.
B) short run between sharp increases in the money supply and higher inflation.
C) long run between sharp increases in the money supply and lower inflation.
D) short run between sharp increases in the money supply and lower inflation.
E) short run between sharp decreases in the money supply and higher inflation.

Question

Quizplus · Accepted Answer

Decades of research around the world suggest a long-run link between sharp increases in the money supply and higher inflation. This is due to the fact that an increase in the money supply, all else being equal, leads to a decrease in the value of each unit of currency, causing prices to rise over time. This relationship between the money supply and inflation is known as the quantity theory of money.

Decades of Research Around the World Suggest a Link in the _____