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Irving Fisher's view that velocity is fairly constant in the short run transforms the equation of
exchange into the ____.
A) Friedman's theory of income determination
B) quantity theory of money
C) Keynesian theory of income determination
D) monetary theory of income determination
Answer: B
Diff: 2 Type: MC Page Ref: 526
Skill: Recall
Objective List: 21.1 Describe how the demand for money is determined
The demand for money represents ____.
A) the quantity of money that people want to hold
B) the relationship between inflation rates and the quantity of money
C) the relationship between interest rates and income
D) All of the above.
Answer: A
Diff: 2 Type: MC Page Ref: 527
Skill: Recall
Objective List: 21.2 Define the theories of the demand for money
Irving Fisher took the view that the institutional features of the economy which affect
velocity change ____ over time so that velocity will be fairly ____ in the short run.
A) rapidly; erratic
B) rapidly; stable
C) slowly; stable
D) slowly; erratic
Answer: C
Diff: 2 Type: MC Page Ref: 527
Skill: Recall
Objective List: 21.1 Describe how the demand for money is determined
In Irving Fisher's quantity theory of money, velocity was determined by ____.
A) interest rates
B) real GDP
C) the institutions in an economy that affect individuals' transactions
D) the price level
Answer: C
Diff: 2 Type: MC Page Ref: 527
Skill: Recall
Objective List: 21.1 Describe how the demand for money is determined