Question 1
The quantity theory of money can be written as
◦
MV =
PY.◦
M/
V =
PY.◦
MV =
P/
Y.◦
MP =
VP.Question 2
Velocity is
not constant if
◦ the money supply does not depend on the interest rate.
◦ the supply of money depends on the interest rate.
◦ the price level increases as aggregate output increases.
◦ the demand for money depends on the interest rate.