Suppose That We Produce a Graph with the Annual Inflation

Multiple Choice

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 ________.

A) quantity theory of money being correct
B) quantity theory of money being incorrect
C) social cost of inflation outweighing the social benefit of inflation
D) social benefit of inflation outweighing the social cost of inflation