Principles of Macroeconomics 7th Edition

Published by South-Western College
ISBN 10: 1-28516-591-8
ISBN 13: 978-1-28516-591-2

Chapter 17 - Money Growth and Inflation - Quick Check Multiple Choice - Page 367: 3

Answer

b. velocity

Work Step by Step

Going through the historical data of the US, the Velocity has remained almost the same in the past 80 years. In the Quantity Equation M x V = P x Y Money Supply can be varied through the Monetary policy of the Central Bank. Nominal GDP also varies across years. It is only Velocity that remains more or less stable over long periods of time.
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