Asked by Hector Villagomez on Jul 25, 2024
Verified
The quantity theory of money can explain hyperinflations but not moderate inflation.
Quantity Theory
An economic theory that relates the level of money supply in an economy to the level of prices and the volume of production.
Hyperinflations
Extremely high and typically accelerating inflation rates, eroding the real value of the local currency and leading to a loss of confidence in the currency.
Moderate Inflation
A situation where the general price level of goods and services rises at a modest pace.
- Understand the quantity theory of money and its implications for the economy.
Verified Answer
HH
haila habibJul 27, 2024
Final Answer :
False
Explanation :
The quantity theory of money is a framework that can explain both hyperinflation and moderate inflation by relating the money supply to price levels, although its accuracy and applicability can vary with economic conditions and the velocity of money.
Learning Objectives
- Understand the quantity theory of money and its implications for the economy.