McqMate
| Q. |
In a period of inflation and price rises the supply of money remains - |
| A. | the same |
| B. | increases |
| C. | decreases |
| D. | increases or decreases pro-portionately. |
| Answer» B. increases | |
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Explanation: Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy. |
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