What Is The Criticism On The Quantity Theory Of Money?

One of the main criticisms is the assumption of other things being constant, though other things do not remain constant only this fact is not enough to reject the theory. All other scientific theories are based on the assumption that other things remain equal. To this objection of the critic's professor Fisher has pointed out that the variations in long run they remain more or less constant.

Secondly, it has urged that the effect of a change in the quantity of money is not simply proportionate change in the price level. Only under exceptional cases, doubling of the quantity of money will double the price level.

Thirdly, the theory is also inadequate to explain the process through which changes in the
quantity of money effect the price level
.
Fourthly, a large majority of transactions taking place through money are industrial, commercial, and financial. Only a small proportion of them is commodity transaction, which are represented by the volume of trade. The theory thus measure not the purchasing power of money, but the cash transaction method
Finally, the theory is quite inadequate o explain the change in price level which occur during a trade cycle.In spite of the above criticism the theory is not entirely useless.