The classical theory of inflation:
A) describes a long-run equilibrium.
B) explains the direct relationship between money supply and the price level.
C) shows the neutrality of money in the long run.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

The classical theory of inflation describes a long-run equilibrium in which the direct relationship between money supply and the price level holds true and money is neutral in the long run. Therefore, all of the statements are true.

The Classical Theory of Inflation