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Quantity Theory of Money

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Quantity Theory of Money
The idea that the amount of money in an economy directly correlates to the price of goods and services. According to this theory, more money in an economy results in higher prices. Nearly all economists agree with the quantity theory of money in the long run, but there is significant disagreement over how true it is in the short term. There is also disagreement over what kinds of money (cash, notes or others) affect prices. The quantity theory of money is a major component of monetarism. See also: Real bills doctrine.


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Specifically, they discuss positive economics, flexible exchange rates, the quantity theory of money, the business cycle, monetary policy, econometric policy evaluation, asset prices, the mechanics of economic development, the labor-market equilibrium, and other topics.
As predicted by the textbook quantity theory of money, this practice has devalued the Zimbabwean dollar and caused hyperinflation.
To detect the quantity theory of money, Sargent and Surico look at scatter plots of filtered time series of inflation and money growth rates and interest rates and money growth rates.
 
 
 
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