Irving Fisher's view that velocity is fairly constant in the short run transforms the equation of exchange into the
A)Friedman's theory of income determination.
B)quantity theory of money.
C)Keynesian theory of income determination.
D)monetary theory of income determination.

Question

Quizplus · Accepted Answer

Fisher's view that velocity is fairly constant in the short run is a central tenet of the quantity theory of money, which posits that changes in the money supply lead to proportional changes in prices. Therefore, the equation of exchange (MV = PQ) is a representation of the quantity theory of money, which predicts that changes in the money supply will be reflected in changes in prices.

Irving Fisher's View That Velocity Is Fairly Constant in the Short