Answer to Question #286345 in Macroeconomics for Nimeshi

Question

When inflation gets very high, people do not like to hold money because it is losing value 

quickly. Therefore, they spend it faster.

When the money supply is doubled, if people spend money more quickly, what happens to 

prices? Do prices more than double, less than double, or exactly double? Explain using the 

Quantity Theory of Money

Answer 1

Within the framework of the quantitative theory of money, the demand for money is determined according to the equation (model) of I. Fischer

$M\times V=P\times Q$

This equality assumes that if the mass has doubled, then prices will double.