Question

According to the quantity theory:

(A) unemployment is everywhere and always a monetary phenomenon.
(B) inflation is everywhere and always a monetary phenomenon.
(C) the equation of exchange does not hold true.
(D) real output is everywhere and always a monetary phenomenon.

Answer 1

B) Inflation is everywhere and always a monetary phenomenon.

Step-by-step explanation:

Henry Thornton developed this theory in 1802. According to the Quantity Theory, In an economy, there is a direct relationship between the quantity of money in the economy and the prices of goods and services. The price levels are directly related to the amount of money in circulation, which is the cause of inflation. Hence the consumer has to pay more for the same amount of commodity.