Inflation can only be fundamentally caused by two factors- Supply side factors and demand side factors. These factor are either reductions in the supply of goods and services or increases in demand due to either the increase availability of money or reallocation of demand. Unless other compensating changes also occur,Inflation is bound to result if either of this occur. In economies prior to the introduction of banks ( a pre banking economy) the quantity of money available, and hence, the level of demand, was equivalent to the quantity of gold available, If the statement above are true, then it is also true that in a pre banking economy
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