Macroeconomics Doubt - Quantity theory

[Rajat]

Hi friends,
Please help me by clarifiying my doubt.
Quantity theory of money says that MV = PT.

Mankiw says that this is an identity (not just an equation) which means that if one of the variables changes, one or more the others must change to maintain the equality. But, suppose money supply of an economy (M) is increased. Also suppose that people just choose to hold this money with them. No purchases. No transactions and No money exchanging hands.
In other words, they choose to sit on idle cash.

In such a situation, neither V changes nor T. So as per Mankiw's claim, P should increase. But how is it possible? and for what reason will prices increase when people are just sitting on excess cash ?

Please explain.
Thanks !

[kangkan]

it is not possible....the monetarist tradition does not acknowledge money as a form of holding wealth.

[Jatin Bavishi]

The quantity theory of money says

MV=PY

A slight modification of the equation as per the Cambridge School would yield

M=kPY         {k=1/V}

=> M/P=kY

As per this model, money has no intrinsic value and is not held for speculative/precautionary purposes but only for transaction purpose.

If money was held for speculative purpose, the equation would be

M/P=kY-hi

where the last term encompasses the speculative demand.