The Classical Theory of Inflation

question 138

Multiple Choice

The classical theory of inflation

• A)is also known as the quantity theory of money.
• B)was developed by some of the earliest economic thinkers.
• C)is used by most modern economists to explain the long-run determinants of the inflation rate.
• D)All of the above are correct.

---

Definitions:

Invested

To have allocated resources, such as money, toward something with the expectation of generating income or profit.

Deposited

The act of placing money or another form of value into an account.

Interest

The cost of borrowing money or the payment received for deposit funds, calculated as a percentage of the principal.

Investment

The allocation of money into financial assets, real estate, or other ventures with the expectation of obtaining additional income or profit.