According to the classical view,
a. velocity is constant, which means changes in price will cause changes in price or quantity.
b. quantity is constant, which means changes in the money supply could cause either changes in velocity or changes in prices.
c. velocity and price are constant so that changes in the money supply causes changes in quantity.
d. velocity and quantity are constant so that changes in the money supply cause changes in prices.
e. velocity is constant while quantity is variable so that changes in the money supply change both price and quantity.
d
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In China, suppose that the price level was 100 in 2014, 110 in 2015, and 120 in 2016. Over these three years
A) the inflation rate accelerated. B) inflation did not occur. C) prices were stable. D) the inflation rate was positive.
Suppose Russia's inflation rate is 200% over one year but the inflation rate in Switzerland is only 2%. According to relative PPP, what should happen over the year to the Swiss franc's exchange rate against the Russian ruble?
What will be an ideal response?