The velocity of money under different circumsances. Concept Introduction: The American economist, Irving Fisher, explained the quantity theory of money by examining the variables of money, price level and aggregate output . The link between total quantity of money (M) and the total amount of spending on final goods and services ( where P is the price level and Y is real GDP is called velocity of money (V). This velocity is the average number of times the dollar is spent in buying the total amount of goods and services produced in the economy. The quantity theory of money explains the link in the variables. V = P × Y M .

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Chapter 15, Problem 3.6P

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To Calculate:The velocity of money under different circumsances.

Concept Introduction: The American economist, Irving Fisher, explained the quantity theory of money by examining the variables of money, price level and aggregate output. The link between total quantity of money (M) and the total amount of spending on final goods and services ( where P is the price level and Y is real GDP is called velocity of money (V). This velocity is the average number of times the dollar is spent in buying the total amount of goods and services produced in the economy. The quantity theory of money explains the link in the variables. V=P×YM .

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