2 The Quantity Theory of Money,cont. △M π M AYY depends on growth in the factors of production and on technological progress (all of which we take as given,for now). Hence,the Quantity Theory of Money predicts a one-for-one relation between changes in the money growth rate and changes in the inflation rate. CHAPTER 7 Money and Inflation slide 21CHAPTER 7 Money and Inflation slide 21 The Quantity Theory of Money, cont. Y/Y depends on growth in the factors of production and on technological progress (all of which we take as given, for now).    = − M Y M Y Hence, the Quantity Theory of Money predicts a one-for-one relation between changes in the money growth rate and changes in the inflation rate. 2