Question

Write down the transaction equation of the Quantity Theory in the classical system.​

Answer 1

Answer:

Definition: Quantity theory of money states that money supply and price level in an economy are in direct proportion to one another. When there is a change in the supply of money, there is a proportional change in the price level and vice-versa. ... Description: The theory is accepted by most economists per se.

Explanation:

According to the quantity theory of money, the general price level of goods and services is proportional to the money supply in an economy—assuming the level of real output is constant and the velocity of money is constant.