Monetarists argue that velocity is reasonably predictable.

Question

Quizplus · Accepted Answer

Monetarists believe that velocity is relatively stable and can be predicted based on changes in the money supply and interest rates. This is because velocity is influenced by rational economic decision-making by households and businesses, which is thought to be relatively consistent over time. However, some critics argue that velocity can be unpredictable and can change due to shifting expectations and economic disruptions.

Monetarists Argue That Velocity Is Reasonably Predictable