Macro Foundations · intro
What moves on the Quantity Theory of Money diagram
With V and Y anchored, the price level moves in proportion to money, the quantity theory's core prediction.
P sits where the money stock meets the quantity-theory line.
The government finances itself by printing. M marches right.
The price level follows in proportion. Double the money, double the prices: every hyperinflation in one move.
Examiners ask this as: money printing inflation, hyperinflation quantity.
Other scenarios on Quantity Theory of Money