According to the quantity theory by Irving Fisher velocity can change the money supply is constant money is neutral inflation has an effect on potential GDP the velocity of money can change real GDP nominal GDP is constant
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According to the quantity theory by Irving Fisher, velocity can change: This statement is correct. The quantity theory of money states that the velocity of money, which represents the rate at which money circulates in the economy, can change over time. Show more…
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The quantity theory of money assumes that real GDP is at potential GDP and does not change. If real GDP were initially below potential GDP and could change, what do you think would happen when the quantity of money increases? The price and potential GDP could both decrease. The price and potential GDP could both increase. The price and real GDP could both decrease. The price and real GDP could both increase.
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