Chapter 3

Well the answer might be lengthy, postulates means facts Okay now, QTM is an approach of money which states that Demand of money depends on number of transactions. Money supply directly proportional to price levels. As money supply increases, the price levels tends to increase which leads to inflation It means value of money falls So money supply indirectly proportional to value of money Ex:- in Venezuela, Govt. Printed more and more money than their reserves and this lead to rise in money supply and inflation- rise in prices (so that a person needs to spend more for doing a transaction) which is also known as decrease in the value of money. And now you can think about poor Venezuela, how it is now 🥲. So Govt. Role is very important and that's what We call Govt. Intervention. MV = Money supply in an economy PT = Money demanded for transaction purpose Don't hesitate to say "I don't understand" if you really haven't understood. Then I'll try to explain it in another way

SAI AKASH GORU

CA Inter

★ 740

09-Aug-23 07:31

Yes understood, thanks a lot for the detailed explanation..😇

Thread Starter

Rifhat Khan

CA Inter

★ 28K+

13-Aug-23 12:39