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14 March, 01:51

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

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  1. 14 March, 01:56
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    The question is incomplete. The complete question is

    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.

    Answer:

    All of the above are correct

    Explanation:

    Inflation can be defined as the general rise in the price of goods and services in an economy over a period of time.

    There are basically three theories of inflation:

    - cost push inflation theory

    - sectorial inflation theory

    - structural inflation theory

    Cost push inflation is caused by the increase in the cost of production which is as a result of a fall in aggregate supply. Cost push inflation may be as a result of increase in the price of raw materials.

    Sectorial inflation can be defined as a rise in the prices of goods and services due to different commercial parts of a country.

    Structural inflation is as a result of unstable and declining growth rate of export in the economy.
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