"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."

1. 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]

A necessary condition is a condition that must be present for an event to occur.

In other words, A is necessary for B means: The presence of B requires the presence

of A (the event B cannot happen without A).

A sufficient condition is a condition that will produce the event.

In other words, A is sufficient for B means: The presence of A implies the

presence B (whenever A is present, B must be present).