History of Economic Ideas
The quantity theory of money is an economic theory that relates the quantity of money in an economy to the level of prices of goods and services, asserting that changes in the money supply directly affect price levels. This theory emphasizes a direct relationship between money supply, velocity of money, price level, and output, often summarized by the equation MV = PY, where M is money supply, V is velocity, P is price level, and Y is output.
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