Question 1 [40 marks] Assume you are applying for a position at the central bank of your native country and you are required to analyse the following assertion: "There cannot be a high inflation rate without a large growth rate in the quantity of money; and there cannot be a large growth rate in the quantity of money without a high inflation rate." (a) Is this statement empirically true? If not, give an example where the assertion is empirically false. [5 marks] (b) Is the above-mentioned assertion saying that a large growth rate in the quantity of money is a necessary and sufficient condition for a high inflation rate? If so, explain with absolute clarity what is the necessity part and the sufficiency part. [20 marks] (c) Is this statement proving that a large growth rate in M is the cause of inflation? Explain briefly. [15 marks]