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General TradingQ
Quantity Theory of Credit
An economic theory that emphasizes the role of credit creation by banks in determining economic output and price levels, rather than focusing solely on the money supply. It argues that bank lending decisions are the primary driver of money creation and economic cycles.
Example
“According to the Quantity Theory of Credit, a surge in bank lending to real estate developers would directly increase the money supply and push property prices higher, potentially creating an asset bubble.”