Fisher's equation: Difference between revisions
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''Economics.'' | ''Economics.'' | ||
A formal expression of the quantity theory of money defining the relationship between the quantity of money in the economy, its velocity of circulation, the number of transactions over a given period and the general level of prices. | A formal expression of the quantity theory of money defining the relationship between the quantity of money in the economy, its velocity of circulation, the number of transactions over a given period and the general level of prices. | ||
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Where: | Where: | ||
P = the general level of prices | P = the general level of prices | ||
M = the quantity of money in the economy | M = the quantity of money in the economy | ||
V = its velocity of circulation, and | V = its velocity of circulation, and | ||
T = the volume of transactions in a given period. | T = the volume of transactions in a given period. | ||
== See also == | == See also == | ||
* [[Quantity theory of money]] | * [[Quantity theory of money]] | ||
Revision as of 14:07, 27 August 2013
Economics.
A formal expression of the quantity theory of money defining the relationship between the quantity of money in the economy, its velocity of circulation, the number of transactions over a given period and the general level of prices.
The equation is conventionally expressed as: P = MV/T
Where:
P = the general level of prices
M = the quantity of money in the economy
V = its velocity of circulation, and
T = the volume of transactions in a given period.
