Quantity equation
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Quantity equation. The identity stating that the product of the money supply and the velocity of money equals nominal expenditure (MV � PY); coupled with the assumption of stable velocity, an explanation of nominal expenditure called the quantity theory of money.
Definition
According to Macroeconomics by Mankiw (7th edition),
- Quantity equation. The identity stating that the product of the money supply and the velocity of money equals nominal expenditure (MV � PY); coupled with the assumption of stable velocity, an explanation of nominal expenditure called the quantity theory of money.
