In the quantity theory of money demand,

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In the quantity theory of money demand, velocity is assumed to be constant. This means that the amount of transactions conducted per unit of time is determined by the behavioral and institutional characteristics of the economy, and is not influenced by changes in the money supply or the price level. The theory also assumes that the demand for real balances (the purchasing power of money) is proportional to the level of transactions in the economy, which is determined by the level of output and employment. However, the price level is not assumed to be constant in the theory, as changes in the money supply can lead to changes in the price level.

In the Quantity Theory of Money Demand