According to the quantity theory:
(a) unemployment is everywhere and always a monetary phenomenon.
(b) inflation is everywhere and always a monetary phenomenon.
(c) the equation of exchange does not hold true.
(d) real output is everywhere and always a monetary phenomenon.

B) Inflation is everywhere and always a monetary phenomenon.

Explanation:

Henry Thornton developed this theory in 1802. According to the Quantity Theory, In an economy, there is a direct relationship between the quantity of money in the economy and the prices of goods and services. The price levels are directly related to the amount of money in circulation, which is the cause of inflation. Hence the consumer has to pay more for the same amount of commodity.

Answer

Consider the following calculation

Explanation

D1 = 1.15*(1+0.15) = 1.3225

D2 = 1.3225*(1+0.15) = 1.52

D3 = 1.52*(1+0.13) = 1.719

D4 = 1.719*(1+0.06) = 1.82

According to dividend discount model,

P0 = D1/(R-G)

D1 - Dividend at t =1

R - Required rate

G - Growth rate

P3 = D4/(R-g) = 1.821/(0.12-0.06) = 30.36

Find P0 by discounting the future dividends and P3

P0 = 1.3225/(1+0.12) + 1.52/(1+0.12)^2 + 1.718/(1+0.12)^3 + 30.36/(1+0.12)^3 = $25.23

Current value of stock = $25.23

b.  P1 = 1.52/(1+0.12)^1 + 1.718/(1+0.12)^2 + 30.36/(1+0.12)^2 = $26.93

P2 = 1.718/(1+0.12)^1 + 30.36/(1+0.12)^1 = $28.64

c.  Dividend yield = Dividend/Price

For year 1, Dividend yield = 1.3225/25.23 = 0.0524 = 5.24%

Capital gains yield = (P1-P0)/P0 = (26.93-25.23)/25.23 = 0.0674 = 6.74%