If income velocity is assumed to be constant, but no other assumptions are made, the level of
Is determined by M.
A)prices
B)income
C)transactions
D)nominal GDP

Question

Quizplus · Accepted Answer

The equation for nominal GDP is MV=PQ, where M is the money supply, V is the velocity of money (assumed to be constant), P is the price level, and Q is the level of transactions. Therefore, if velocity is assumed to be constant and no other assumptions are made, the level of nominal GDP is determined solely by the money supply, or M.

If Income Velocity Is Assumed to Be Constant, but No