Question

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 1

Answer:

C) slowly; stable

Explanation:

Velocity is defined as the rate of turnover of money.

Velocity = Nominal aggregate income / money supply

Irving Fisher posited that the factors that affect velocity are institutions that impact how transactions are conducted. According to him, institutional factors that affect the velocity of money change slowly. Therefore, in the short run, velocity is fairly stable.