2 The Quantity Theory of Money,cont. Recall from Chapter 2: The growth rate of a product equals the sum of the growth rates. The quantity equation in growth rates: △M,AV△P,△Y M D The quantity theory of money assumes is constant,so △V =0. CHAPTER7 Money and Inflation slide 18 CHAPTER 7 Money and Inflation slide 18 The Quantity Theory of Money, cont. ▪ Recall from Chapter 2: The growth rate of a product equals the sum of the growth rates. ▪ The quantity equation in growth rates: M V P Y M V P Y     + = + The quantity theory of money assumes is constant, so = 0. V V V  2