According to the quantity theory of money, the inflation rate equals

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According to the quantity theory of money, inflation rate equals the growth rate of the money supply minus the growth rate of real output. This equation represents the relationship between the amount of money in circulation and the level of economic activity, assuming that the velocity of money (the rate at which money changes hands) is constant. When the money supply grows faster than real output, the excess money translates into higher prices and inflation. Conversely, when real output grows faster than the money supply, the relative scarcity of money leads to lower prices and deflation.

According to the Quantity Theory of Money, the Inflation Rate