Equation of exchange: Tautology arising from the definition of - TopicsExpress

Equation of exchange: Tautology arising from the definition of velocity. Quantity Theory of Money: Predictive theory relating rising general prices with rising money supply; predicated on stable velocity, and hence stable money demand. Not the same thing, mmkay. Also, the interest rate isnt the relevant transmission mechanism for monetary policy; its excess money balances at the going price level. Burn liquidity preference and get back to the Cambridge k.

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