A-LevelEconomicsThe macroeconomy9708/12 · May/June 2010 · Q241 Mark
Which statement about inflation is correct?
ACost-push inflation is likely to occur when the government increases its expenditure.
BDemand-pull inflation is likely to occur when the country's exchange rate appreciates.
CThe Quantity Theory of Money predicts that changes in money supply can cause inflation.
DWhen inflation is unanticipated real values remain unchanged.
✓ Correct answer
C: The Quantity Theory of Money predicts that changes in money supply can cause inflation.
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