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[ QUOTE ] He has all the necessary knowledge to get it right, lays it out for you, puts it in the correct order even... and then just misses it. If M, V and P are held constant then Q cannot grow, but deflation is a decrease in P, which is on the same side as Q so a decrease in P leads to an increase in Q! [/ QUOTE ] lol, wow! [/ QUOTE ] What you are both missing is that deflation (a decrease in P) is undesirable in and of itself for the many reasons discussed elsewhere. He is holding P (relatively) constant because that is the main objective of monetary policy. |
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