The quantity theory of money was derived from the quantity equation by asserting that

Question

Quizplus · Accepted Answer

The quantity theory of money asserts that the velocity of money is constant, meaning that the amount of times money changes hands in a given period is fixed. This allows us to derive the equation MV = PY, where M is the money supply, V is velocity, P is the price level, and Y is real output or economic activity. Therefore, the correct answer is C, as the quantity theory of money assumes a fixed velocity of money.

The Quantity Theory of Money Was Derived from the Quantity