 Quantity Theory of Money: True or FalseTing Chao Chiung International Journal of Economics and Finance, 2017, vol. 9, issue 10, 46-63 Abstract: I convert F=ma into m=F¡Âa arithmetically as economists convert V=PY¡ÂM into MV=PY. m=F¡Âa predicts absurdly that there is no mass if acceleration is zero. For example, you do not have mass when you sleep. Similarly, MV=PY predicts ridiculously that there is no aggregate income if there is no money. In fact, barter economy operates. As force is scalar in F=ma calculated as mass multiply acceleration so that force is not cause to determine mass in m=F¡Âa, income velocity is scalar in V=PY¡ÂM calculated as ex-post nominal aggregate income is divided by ex-post quantity of money stock so that aggregate income does not depend on income velocity. Since the symbol V in V=PY¡ÂM is scalar and the symbol V in MV=PY is cause so that MV=PY is not equivalent to V=PY¡ÂM, arithmetical conversion is an invalid method to prove MV=PY. In other words, it is computation that MV=PY is equivalent to V=PY¡ÂM as exactly as m=F¡Âa is equivalent to F=ma while it is thinking that MV=PY and V=PY¡ÂM are different. Hence, quantity theory of money is false. Keywords: money demand; money supply; definition of money; quantity theory of money; monetary policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijefaa:v:9:y:2017:i:10:p:46-63 Access Statistics for this article More articles in International Journal of Economics and Finance from Canadian Center of Science and Education Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.