According to the quantity theory of money, velocity:
A)varies substantially with changes in the rate of interest and the expected rate of inflation.
B)varies with changes in the growth rate of the money supply.
C)is fairly constant, responding only to changes in the expected rate of inflation.
D)is virtually constant, responding only to changes in the underlying institutional structure.

Question

Quizplus · Accepted Answer

The quantity theory of money posits that the velocity of money is relatively stable and changes primarily due to shifts in the institutional framework of the economy, rather than in response to interest rates, inflation expectations, or the growth rate of the money supply.

According to the Quantity Theory of Money, Velocity