Many Economists Claim That the Velocity of Circulation Is Relatively

Multiple Choice

Many economists claim that the velocity of circulation is relatively stable over the long run. Of the following, which can be used to support this claim?

A) Increased money supply would lead to inflation and hence a higher nominal rate of interest, thus off- setting any fall in the real rate of interest.
B) The demand for money is relatively elastic in the long run.
C) Sufficient time has elapsed for the direct mechanism to have worked fully through.
D) A and C
E) All of the above