The Quantity Theory by Keynes

• Keynes reformulated the Quantity Theory of Money.

• In his opinion the quantity of money does not directly affect price level.

• A change in the quantity of money may lead to a change in the rate of interest.

• With a change in the rate of interest the volume of investment is quite likely to change.

• A change in investment will lead to a change in income, output and employment and also a change in cost of production.

• This will lead to the change in prices of goods and services.

• The Keynesian version of the Quantity Theory integrates monetary theory with the general theory of value

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