00:01
Hello students, we need to write here what is the quantity theory of money? what explanation does the quantity theory provide for inflation? right? we need to write.
00:11
So let's start with quantity theory of money.
00:15
So we can write here, quantity theory of money.
00:22
We need to explain this first.
00:27
So if i write here, we can explain this by quantity theory theory quantity theory of money is a framework for analyzing price variations price changes or variations in relation to in relation to country's money supply countries, money, supply, right? so we can here, it is, if we are writing here, it is a theory about the connection between the connection between money and price, money and price, if i write here, money and price, if i write here, money and price, that assumes that, that, that assumes that velocity, death assumes that velocity of money is constant, right? so now we can write formulation of quantity theory of money, theory of money is based on, is based on, based on fisher equation if we are going to write here so let's write here fisher equation so what is our figure fisher equation if we are going to write here so this is m multiply by v is equals to p multiply by t right so m is money supply money supply v is if we are writing here is velocity of money and p if we are going to write is p is average price level so basically p is average price level and t if we are going to write is volume of transactions, volume of transactions in economy.
03:55
Right...