As per Quantity Theory of Money put forth by Milton Friedman, growth in the quantity of money is the primary determinant of the inflation rate.
Theory suggests that as money supply increases, inflation should increase too and as money supply decreases, so should inflation rate.
There is a possitive correlation between inflation rate and money supply.
It is evidant from the trendline that the theory is actually correct as applied on long term data of Pakistan.
| Decade | Average_Inflation_Rate | Average_Money_Supply_Growth |
| 1960s | 3.507509 | 11.334355 |
| 1970s | 12.418677 | 16.983457 |
| 1980s | 6.976939 | 13.28831 |
| 1990s | 9.247231 | 16.183779 |
| 2000s | 8.919544 | 18.484111 |
| 2010s | 6.69435 | 12.94076 |
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