De kwantiteitstheorie van geld III

Economists use an updated form of the quantity equation where the value of total output adjusted for inflation (Y) replaces the total number of transactions (T). This is because tracking every transaction is nearly impossible, while output data is more reliable and easier to measure.

Transactions and output are not identical, but they are closely related. More output usually means more transactions, but more transactions don’t necessarily imply more output. For example, buying a comic book is a transaction. But if it's secondhand and not newly produced, it doesn't count as current output.

The adapted equation is MV = PY, where M is the money supply, V is the velocity of money, P is the average price level, and Y is the inflation-adjusted total value of all final goods and services produced, also known as real GDP.

Together, P × Y represents nominal GDP, the total dollar value of goods and services produced.

Economists use real money balances (M/P) to show how many units of the average good the money supply can buy—for example, if M is $500 and P is $1, the money supply can purchase 500 goods.