What does the evidence gained from studying hyperinflation indicate?
A) The rate of inflation is not closely related to the rate at which the money supply changes.
B) Nominal interest rates are independent of the money supply.
C) Inflation rates parallel money supply growth rates.
D) Inflation rates move in the opposite direction as the growth rate in money supply.

Question

Quizplus · Accepted Answer

Inflation rates tend to parallel money supply growth rates, as evidenced by studies on hyperinflation. This relationship is based on the quantity theory of money, which suggests that a rapid increase in the money supply leads to a proportional increase in prices.

What Does the Evidence Gained from Studying Hyperinflation Indicate