The Quantity Theory of Inflation Indicates That If the Aggregate

question 101

Multiple Choice

The quantity theory of inflation indicates that if the aggregate output is growing at 3% per year and the growth rate of money is 5%,then inflation is

• A)2%.
• B)8%.
• C)-2%.
• D)1.6%.

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Definitions:

Inferior Good

A type of good for which demand decreases as the income of the consumer increases, opposite to normal goods.

Negative

In the context of economics, denotes a situation or indicator that reflects a decrease, deficit, or detrimental condition.

Inelastic Supply

A situation where the quantity supplied of a good or service is not significantly influenced by changes in price.

Quantity Supplied

The total amount of a product that producers are willing and able to sell at a given price over a specified period.