When we analyze the relationship between inflation and the money supply, we assume that:
A) all other factors that affect the rate of inflation remain constant.
B) this relationship holds only in a democratic country.
C) this relationship reflects a nonlinear relationship.
D) the money supply is backed by gold alone.

Question

Quizplus · Accepted Answer

The assumption that all other factors remain constant is known as ceteris paribus, which is commonly used in economic analysis to isolate the effect of one variable on another.

When We Analyze the Relationship Between Inflation and the Money