In the quantity theory of money, the quantity of money is assumed to
A) not influence the velocity of circulation.
B) rise during recessions.
C) fall during recessions.
D) be constant.

Question

Quizplus · Accepted Answer

The quantity theory of money assumes that the velocity of circulation is constant or not influenced by changes in the quantity of money. This theory focuses on how variations in the money supply affect price levels and economic activity, assuming other factors like velocity remain stable.

In the Quantity Theory of Money, the Quantity of Money