Question

Please explain the two versions of Quantity theory of money

Please respond with short sentences

WILL RATE

Answer 1

1) Quantity theory of money -Fisher

According to fisher - Increase in the quantity of money leads to the rise in the general price. He believed that the greater the quan­tity of money, the higher the level of prices and vice versa.

The general price level in a community is influenced by the following factors:

(a) The volume of trade or transactions;

(b) The quantity of money;

(c) Velocity of circulation of money

1) Quantity theory of money - Cambridge approach

According to Cambridge - Value of a commodity is determined by demand for and supply of it. It laid stress on the store of value function of money in sharp contrast to the medium of exchange function of money.