Answer:
a) transactions per dollar increase so the price level rises.
Step-by-step explanation:
As per 'Fishers Quantity Theory of Money'
MV = PT ; where
M = Money supply , P = Price , V = Velocity of money , T = Transactions
It implies that : total value of transactions at current price level is equal to total money supply multiplied by Velocity.
Velocity symbolises the rate of circulation of money. It denotes the frequency, that a currency unit is used for transactions.
Restructuring the above equation : P = MV / T
Price & Velocity are directly related. Low velocity means people tend to hold money, so it decreases demand & price level. High velocity means people tend to spend money, so it increases demand & price level.