Both the monetarist view of the economy and the simple quantity theory of money hold that velocity is constant.

Question

Quizplus · Accepted Answer

The monetarist view of the economy and the simple quantity theory of money assume that velocity is relatively stable in the long run, but they do not hold that it is constant. In fact, velocity can and does fluctuate in response to changes in economic conditions, such as shifts in confidence, interest rates, or banking regulations. Thus, while these theories use velocity as a key variable in explaining fluctuations in the money supply and price level, they do not treat it as a fixed or predetermined factor.

Both the Monetarist View of the Economy and the Simple