Monetary inflation
Monetary inflation means the currency by excessive issue of currency supply over real goods and services.
This draws an excess demand for commodities leading to higher prices. Raising prices is not simply increasing the amount of money, but the demand which it makes possible.
Monetary inflation is well defined by the equation of exchange Fisher M * V = P * T
where: Broad money-M V-speed movement of the
P-The general level of prices T-volume transactions.
So you can see that if M (money) is greatly increased causing a major imbalance in that equation can not be brought to normal only by increasing of P (the general level of prices). Say this because:-T (the volume of transactions) can not increase more than the maximum we allow production – V (velocity of circulation of money) is not easily changed because they are difficult to change: the tastes, habits and consumer preferences .
