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Quantity theory of money and inflation

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To what extent does the quantity theory of money provide a realistic view of inflation?

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The solution explains the extent to which the quantity theory of money provides a realistic view of inflation. It is detailed and goes into a fair amount of detail about the quantity theory of money. This ideal for students who want to clearly understand the quantity theory of money and its impact on inflation.

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Quantity Theory of Money: A theory that states a given percentage change in the money supply leads to an equal percentage change in nominal gross domestic product.

This theory is derived from the "equation of exchange": M*V = P*Q, where M is the money supply, V is the ...

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