According to the quantity theory of money, ultimate control over the rate of inflation in the United States is exercised by:
A) the Organization of Petroleum Exporting Countries (OPEC).
B) the U.S. Treasury.
C) the Federal Reserve.
D) private citizens.

Question

Quizplus · Accepted Answer

According to the quantity theory of money, inflation is caused by an increase in the supply of money. Therefore, the entity that has control over the supply of money has the ultimate control over the rate of inflation. In the United States, the Federal Reserve is responsible for setting monetary policy and controlling the money supply. Therefore, the Federal Reserve has ultimate control over the rate of inflation.

According to the Quantity Theory of Money, Ultimate Control Over