How does the quantity theory of money explain inflation?

It is assumed that the money supply is determined by the central bank. One of the factors that determines the real quantity of money demanded is the incentive to trade - nominal money demand is positively related to prices. Since there is an inverse relationship between the price level and the value of money, there is an inverse relationship between nominal money demand and the value of money. Thus, when prices rise, people still need to use money as a medium of exchange; if the actual quantity of goods and services exchanged remains the same, or changes less than the rise in prices, the demand for nominal money rises. According to the quantity theory of money, the supply of money present in the economy determines the value of money and the price level, and thus an increase in the quantity of money is the main cause of inflation. The equation of exchange expresses the link between money and price in a defining equation. Money will be spent and it may also change hands many times over a period of time, with the number of changes representing how fast or slow money moves. Using macro data it is possible to calculate the average number of times the money circulating in a country's economy changes hands in a year to purchase goods and services, known as the velocity of money circulation. Using M for the money supply and GDP for the nominal amount of output, there is the trading equation V= PQ/M. The modern school of monetary science has revamped and developed this tradition of classical economics, with the central idea that growth in the money supply determines the level of output in the short run and the price level in the long run.