According to the quantity theory of money:

Question

Quizplus · Accepted Answer

The quantity theory of money is often represented by the equation MV = PQ, which can be transformed into the percentage change form ΔM/M = ΔP/P + ΔGDP/GDP, where ΔM/M is the percentage change in the money supply, ΔP/P is the percentage change in the price level, and ΔGDP/GDP is the percentage change in real GDP. This equation reflects the direct relationship between changes in the money supply and changes in the price level and real output.

According to the Quantity Theory of Money