The evidence gained from studying hyperinflation indicates that:
A) inflation rates parallel money supply growth rates
B) nominal interest rates are independent of the money supply
C) the rate of inflation is not closely related to the rate at which the money supply changes
D) none of the above

Question

Quizplus · Accepted Answer

The evidence gained from studying hyperinflation indicates that inflation rates parallel money supply growth rates. This means that as the money supply grows, inflation rates also increase. This relationship is particularly strong in cases of hyperinflation where inflation rates can skyrocket due to excessive money printing. Therefore, option A is the best choice. Options B and C are incorrect as they go against this relationship.

The Evidence Gained from Studying Hyperinflation Indicates That