In Fisher's transaction velocity model, one of the following is not an assumption:
A)velocity of circulation of money is constant
B)the volume of transactions is constant
C)full employment
D)p is considered as an active factor

Question

Quizplus · Accepted Answer

In Fisher's transaction velocity model, the price level (P) is not considered an active factor; instead, it is determined by the equation of exchange (MV = PT), where M is the money supply, V is the velocity of money, T is the volume of transactions, and P is the price level. The model assumes that V and T are constant, and does not necessarily assume full employment, making D the correct choice as it does not align with the foundational assumptions of the model.

In Fisher's Transaction Velocity Model, One of the Following Is