The velocity of money is assumed to be constant in the Classical model because
A) the payment habits of the community.
B) fixed level of real GDP.
C) the demand for money varies with the level of real output.
D) aggregate demand is constant.

Question

Quizplus · Accepted Answer

The velocity of money in the Classical model is assumed to be constant due to the payment habits of the community, which are considered stable over time. This assumption implies that the frequency at which money circulates in the economy does not change significantly in the short term.

The Velocity of Money Is Assumed to Be Constant in the Classical