As monetarists view the equation of exchange,
A) V changes erratically and unpredictably.
B) V is quite stable.
C) V usually changes in the same direction of any given change in M.
D) V usually changes in the opposite direction of any given change in M.

Question

Quizplus · Accepted Answer

Monetarists believe that V, which represents the velocity of money or the rate at which money circulates in the economy, is quite stable over time. Therefore, changes in M (money supply) will have a more predictable impact on P (price level) and/or Q (real output).

As Monetarists View the Equation of Exchange