Respuesta :
Increase at the same rate as the growth in the money supply.
What is quantity theory?
One of the schools of Western economic thinking that evolved in the 16th and 17th century in monetary economics is the quantity theory of money. According to the QTM, the overall level of prices for goods and services is inversely correlated with the money supply.
Keynesian economists contested the idea, but Milton Friedman and the monetarist school of thought updated and revitalised it. The direct correlation between the money supply and price level does not hold, according to the theory's detractors, since money velocity is unstable and prices are sticky in the short term. According to conventional macroeconomic theory, the CPI-based measure of inflation is unaffected by changes in the money supply.
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