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The quantity theory of money suggests that inflation is caused by:
  • a)
    Increases in government spending
  • b)
    Decreases in money supply
  • c)
    Increases in velocity of money
  • d)
    Increases in price level
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
The quantity theory of money suggests that inflation is caused by:a)In...
According to the quantity theory of money, inflation is primarily caused by increases in the money supply. When the money supply grows faster than the output of goods and services in the economy, it leads to an excess of money in circulation, resulting in increased prices.
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The quantity theory of money suggests that inflation is caused by:a)Increases in government spendingb)Decreases in money supplyc)Increases in velocity of moneyd)Increases in price levelCorrect answer is option 'B'. Can you explain this answer?
Question Description
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