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quantity theory

Line breaks: quan|tity the¦ory
(also the quantity theory of money)

Definition of quantity theory in English:

noun

[mass noun] Economics
The hypothesis that changes in prices correspond to changes in the monetary supply.
Example sentences
  • If these two variables were assumed to remain constant, then the simple quantity theory would predict the price level to change in proportion to a change in the money supply.
  • The correlation between price level and money supply is determined by the quantity theory of money.
  • Traditionally, classical economists supported the quantity theory of money as explaining price levels.

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