Oakland Community College Quantity Theory of Money Worksheet
Description
The Quantity Theory of Money – (watch video part 1) Click Here
- What is the quantity theory of money?
- What is the equation of the quantity theory of money?
- What does each variable stand for in the equation?
- What does each side of the equation equal after multiply the variables?
- What is the velocity of money?
- Is M x V a buyer or seller perspective?
- Is P x Y a buyer or seller perspective?
The Causes of Inflation – (watch video part 2) Click Here
- What are the possible changes in the quantity theory of money to inflation?
- Of the four variables (MxV=PxY), which are the most stable and which fluctuate easily?
- How many times on average has money been used to domestically purchase goods and services?
- Since V and Y are stable, what causes P to change? Explain why this is?
- Using the example of Peru, explain how the M (money supply) and P (inflation) caused hyperinflation.
- What are the 3 principles (or big takeaways) from the quantity theory of money and its correlation to inflation?
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