While the classicists believed that both velocity and output are stable, Keynesians believe:
A) velocity is stable and output is variable.
B) velocity and output are both variable.
C) output is stable and velocity is variable
D) the same as the classical economists that both output and velocity are stable
E) at low levels of income both velocity and output are stable, but at high levels of income velocity becomes variable.

Question

Quizplus · Accepted Answer

Keynesians believe that both velocity and output are variable, as opposed to classical economists who believe in their stability. The Keynesian theory focuses on the fact that output and employment are determined by aggregate demand, which can be influenced by policy and other factors. Therefore, both velocity and output are subject to change and not fixed.

While the Classicists Believed That Both Velocity and Output Are