THE QUANTITY THEORY: THE "PASSIVENESS OF PRICES"
Heart of quantity theory: price-level cannot change without
prior change in money, deposits, trade, or velocities:
independently rising price-level, unable to alter trade
or velocities, would drive money away, and so be unable to
sustain itself; individual prices can rise independently,
but other prices must fall to compensate 292-295
Criticism: argument impressive only because it assumes an
_uncaused_ rise in general price-level; when causes
assigned, prices can independently rise, compelling
modification in other factors in "equation of exchange";
"transitional" and "normal" effects: instances 295-299
Quantity theory conflicts with supply and demand: supply
and demand holds good: particular prices and price-level 299-300
Generalization of conflict to include cost of production,
capitalization theory, imputation theory 300
Capitalization theory _vs._ quantity theory; different
psychological assumptions of the two theories 300-306
Cost of production _vs._ quantity theory; money-_income_
_vs._ quantity of money 306-308
Quantity theory false, granting all its assumptions 308-310
Doctrine that price-level independent of particular prices,
and presupposed by them, false; absolute value of money,
not price-level, presupposed; price-level may change
with value of money constant, through changes in absolute
values of goods 310-314