If the demand for money depends on the ________ and the velocity is not constant, then the quantity theory of money ________.
A) level of GDP; does not hold
B) interest rate; does not hold
C) interest rate; still holds
D) level of GDP; still holds

Question

Quizplus · Accepted Answer

The quantity theory of money assumes a constant velocity and that money demand is primarily a function of GDP. If money demand depends on the interest rate and velocity is not constant, the theory does not hold.

If the Demand for Money Depends on the ________ and the Velocity