Quantity equation

Quantity equation is 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.