Step-by-step explanation:
Law of Supply & Demand.
The Price Revolution was a period of inflation that occurred in Europe from the late 15th century to the mid-17th century. During this time, there was a significant increase in the supply of precious metals such as gold and silver due to the colonization of the Americas, which led to an increase in the money supply.
The law of supply and demand states that the price of a good or service is determined by the interaction between the quantity of the good or service supplied by producers and the quantity demanded by consumers. When the supply of a good or service increases, and the demand remains the same, the price tends to decrease. Conversely, when the demand for a good or service increases, and the supply remains the same, the price tends to increase.
In the case of the Price Revolution, the increased supply of precious metals led to an increase in the amount of money in circulation. This, in turn, led to an increase in demand for goods and services, which resulted in an increase in prices. As prices increased, producers were incentivized to increase their production to take advantage of the higher prices, which eventually led to an increase in the supply of goods and services.
Therefore, the Price Revolution demonstrates the law of supply and demand in action, where the increased supply of money led to an increase in demand for goods and services, resulting in higher prices, and ultimately an increase in the supply of goods and services to meet that demand.