Which of the following statements is not consistent with the quantity theory of money?
A) The velocity of money can be affected by how frequently workers are paid.
B) The velocity of money can be affected by the development of new financial instruments, such as interest-bearing checking accounts.
C) The velocity of money can be affected by the manner in which the banking system clears transactions between banks.
D) Velocity can change with changes in the interest rate.

Question

Quizplus · Accepted Answer

The quantity theory of money primarily focuses on the relationship between the money supply in an economy and the level of economic activity, rather than directly linking velocity changes to interest rate fluctuations. Changes in the velocity of money are more directly associated with payment frequencies, financial innovations, and transaction clearance methods, rather than interest rates themselves.

Which of the Following Statements Is Not Consistent with the Quantity