International Evidence Shows Us That

question 94

Multiple Choice

International evidence shows us that

• A)there is a general tendency for money growth and inflation to be correlated, but the quantity theory does not predict inflation precisely.
• B)in the long run a 1 percent increase in the growth rate of money causes a 1 percent increase in inflation.
• C)there is a general tendency for money growth and inflation to be inversely related, and the quantity theory is a poor predictor of inflation.
• D)money growth and inflation are always rising, and the quantity theory predicts inflation accurately.
• E)there is a general tendency for money growth and inflation to be correlated, and the quantity theory predicts inflation precisely.

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Definitions:

Cost of Debt

The effective rate that a company pays on its borrowed funds, which can include loans, bonds, and other forms of debt.

Debt/Equity Ratio

This ratio demonstrates the equity to debt proportion in the context of financing company assets.