According to the empirical evidence the quantity theory of money is a good explanation of inflation...

According to the empirical evidence the quantity theory of money is

a good explanation of inflation in the short run, which suggests that prices adjust quickly.
		a good explanation of inflation in the short run, which suggests that some prices adjust slowly.
		not a good explanation of inflation in the short run, which suggests that prices adjust quickly.
		not a good explanation of inflation in the short run, which suggests that some prices adjust slowly.

Expert Solution

Answer = correct option is D

According to empirical evidence the quantity theory of money is not a good explanation of inflation in short run which suggests that some price adjusts slowly.

Other option are incorrect because

Option A and B incorrect since quantity theory of money is not a good explanation for inflation in short run rathee it is good explanation for long run
Option C is incorrect since it is good explanation for inflation in long run so it suggests price adjusts slowly and not quickly

Rahul Sunny answered 3 years ago

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