It Is Often Said That Inflation Is a "Monetary Phenomenon

question 104

Multiple Choice

It is often said that inflation is a "monetary phenomenon." The most accurate interpretation of this phrase is that

• A)the price level cannot rise without an increase in the money supply.
• B)a continuous rise in prices is possible only with continuing increases in the money supply.
• C)only an increase in the money supply can start a period of inflation.
• D)repeated supply shocks cannot drive up prices if there is no monetary validation.
• E)increases in the price level are always associated with increases in the money supply.

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