Question

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 changesin 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

Answer 1

d

Step-by-step explanation:

The quantity theory of money was developed by Irving Fisher

According to the the quantity theory of money :

Money supply x velocity = price x quantity

Velocity and quantity are constant in the short run. So, a change in money supply leads to changes in price

According to the equation, changes in money supply leads to equal and proportional changes in price