How P responds to△M M =L(r+πe,Y) For given values of r,y,and ne, a change in M causes p to change by the same percentage -just like in the Quantity Theory of Money. CHAPTER 7 Money and Inflation slide 37 CHAPTER 7 Money and Inflation slide 37 How P responds to M ▪ For given values of r, Y, and  e , a change in M causes P to change by the same percentage - just like in the Quantity Theory of Money. ( , ) M e L r Y P = + 