According to the classical money transmission mechanism,if the money supply increases,then individuals will start to spend money,since they are holding excess cash and they cannot control the money supply.

Question

Quizplus · Accepted Answer

According to the classical money transmission mechanism, an increase in the money supply will lead to an increase in spending by individuals because they are assumed to be holding excess cash and cannot control the overall money supply. This is based on the assumption that the velocity of money (the rate at which money changes hands in the economy) remains constant.

According to the Classical Money Transmission Mechanism,if the Money Supply