The Quantity Theory of Money

This video introduces the quantity equation and the quantity theory of money, which shows the relationship between changes in the money supply and changes in prices.

For more information and a complete set of microeconomics videos, see
http://www.economistsdoitwithmodels.com/microeconomics-101

by Economists Do It With Models

Category:

Education

Tags:

• quantity theory of money
• quantity equation

[maxkytube]

%change (M*V) is not equal to %Change M + %change V

for instance if I had %5 * (100*3) = 300* 5% = 15

but 5%*100 + 5%*3 = 5.15, so they are not the same. Am I missing something in your presentation?

[jodiecongirl]

@maxkytube I added a video response that addresses this point.

[PissedFechtmeister]

Velocity of money isn't really constant though. It usually slows in a recession and accelerates during economic growth. There are counterexamples to both, of course, and it depends a bit on one's measure of the money supply. Excellent video series.

[TheArfdog]

Hi, maybe you can do a video that briefly explains why gold is no longer an appopriate currency, since lately in politics it's been mentioned a few times. This equation perfectly illustrates why.

[jpat911]

@maxkytube

Take the natural log of %change(MV)=%change(PY) to get the last equation. its the product rule of natural logarithms

[NovaSpace888]

Thanks Jodie, very clear and easy to understand.

[ctkdev]

How does capacity utilization factor into the Quantity Theory of Money?

[David4462]

Nice job Jodie! Your explanations are always well thought-out and clearly explained.

[happyflea]

Great video!

[Timb0NZ]

please teach us this shit in a bikini