The belief that the velocity of money is not constant, but is highly predictable, is associated with the:
A) classical school.
B) Keynesian school.
C) supply-side school.
D) monetarist school.

Question

Quizplus · Accepted Answer

The idea that the velocity of money is predictable and not constant is a key tenet of monetarism, a school of thought associated with economists such as Milton Friedman. Monetarists argue that changes in the money supply have a predictable impact on the economy, primarily through changes in aggregate spending. They also believe that the velocity of money is closely linked to interest rates and expectations about future inflation.

The Belief That the Velocity of Money Is Not Constant