QUANT I TYtheoryof

MONEYby:

Mark Deson S. Cuñado

Quantity theory of money states that money supply and price level in an economy are in direct proportion to one another. When there is a change in the supply of money, there is a proportional change in the price level and vice-versa.

Fisher Equation on Quantity Theory of Money

M*V= P*TMoney supply Velocity of money Price level volume of the

transactions

The entire stock of currency and other liquid instruments in a country's economy as of a particular time.

Money Supply

Velocity of Money

The rate at which money is exchanged from one transaction to another, and how much a unit of currency is used in a given period of time.