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Suppose that we produce a graph with the annual inflation rate on the y-axis and the growth rate of ...

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Suppose that we produce a graph with the annual inflation rate on the y-axis and the growth rate of ...

Suppose that we produce a graph with the annual inflation rate on the y-axis and the growth rate of the money supply minus the growth rate of real GDP on the x-axis. We plot the averages of each of these quantities over the past 50 years on the graph. If the countries' points all lie approximately on the 45° line, then this lends support to the ________.

▸ quantity theory of money being correct

▸ social cost of inflation outweighing the social benefit of inflation

▸ social benefit of inflation outweighing the social cost of inflation

▸ quantity theory of money being incorrect

Textbook

Macroeconomics

Edition: 3^rd

Authors: Acemoglu, Laibson, List

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