Which statement about the quantity theory of money is false?
A) There must be enough money, multiplied by velocity, to allow sales of nominal GDP.
B) All inflation is directly caused by increases in the quantity of money.
C) All inflation is accompanied by increases in the quantity of money.
D) There must be enough money, multiplied by velocity, to allow sales of all final products and services produced.
E) The quantity theory of money is behind the claim that "printing money causes inflation."

Question

Quizplus · Accepted Answer

While increases in the quantity of money can contribute to inflation, there are other factors, such as changes in supply and demand for goods and services, that can also cause inflation. Therefore, not all inflation is directly caused by increases in the quantity of money.

Which Statement About the Quantity Theory of Money Is False