money, quantity theory of
- money, quantity theory of
-
Economic theory relating changes in the price level to changes in the quantity of money.
It has often been used to analyze the factors underlying
inflation and
deflation. The quantity theory was developed in the 17th and 18th centuries by philosophers such as
John Locke and
David Hume and was intended as a weapon against
mercantilism. Drawing a distinction between
money and wealth, advocates of the quantity theory argued that if the accumulation of money by a nation merely raised prices, the mercantilist emphasis on a favourable
balance of trade would only increase the supply of money without increasing wealth. The theory contributed to the ascendancy of
free trade over
protectionism. In the 19th–20th centuries it played a part in the analysis of
business cycles and in the theory of rates of
foreign exchange.
* * *
Universalium.
2010.
Look at other dictionaries:
Quantity theory of money — In economics, the quantity theory of money is a theory emphasizing the positive relationship of overall prices or the nominal value of expenditures to the quantity of money. Origins and development of the quantity theory The quantity theory… … Wikipedia
quantity theory of money — economic (economics) theory relating changes in the price levels to changes in the quantity of money. In its developed form, it constitutes an analysis of the factors underlying inflation and deflation. As developed by the English… … Universalium
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quantity theory — noun or quantity theory of money : a theory in economics: changes in the price level and the value of money vary with changes in the amount of money in circulation … Useful english dictionary
quantity theory of money — noun see quantity theory … Useful english dictionary
quantity theory of money — noun the theory that changes in prices and the value of money vary with changes in the amount of money in circulation … Wiktionary
quantity theory — noun Date: 1888 a theory in economics: changes in the price level tend to vary directly with the amount of money in circulation and the rate of its circulation … New Collegiate Dictionary
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