The quantity theory of money assumes that

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The quantity theory of money assumes that velocity is constant, meaning the number of times a unit of money changes hands is fixed. This assumption allows for the equation of exchange, MV = PQ, where M is the money supply, V is velocity, P is the price level, and Q is the quantity of goods and services produced. By assuming velocity is constant, the theory suggests that changes in the money supply will lead to proportional changes in the price level.

The Quantity Theory of Money Assumes That