Mu and Quantity theory of money: Difference between pages

Revision as of 14:20, 23 October 2012

Economics. A theory formalised by Irving Fisher, which links the level of prices with the amount of money in circulation.

It is defined as: P = MV/T, where P = price level, M = amount of money in circulation, V = velocity of circulation and T = volume of transactions.

Monetarists believe that it is the amount of money in circulation which has the biggest effect on price levels and inflation rates.

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-The Greek letter 'µ' (equivalent to the English letter m).
+''Economics''.
-Used to denote the Arithmetic mean.
+A theory formalised by Irving Fisher, which links the level of prices with the amount of money in circulation.
+It is defined as: P = MV/T, where P = price level, M = amount of money in circulation, V = velocity of circulation and T = volume of transactions.
+Monetarists believe that it is the amount of money in circulation which has the biggest effect on price levels and inflation rates.
 == See also ==
-* [[Arithmetic mean]]
+* [[Fisher's equation]]
-* [[Sigma]]