Economics • Economic BasicsMedium
In classical macroeconomics, the Quantity Theory of Money expressed as MV = PT (where M is money supply, V is velocity, P is price level, and T is transactions) was formulated by:
A. Irving Fisher✓ Correct Answer
B. A.C. Pigou
C. John Hicks
D. Paul Samuelson
💡 Solution & Explanation
Irving Fisher formulated the classical Quantity Theory of Money equation MV equals PT in his influential 1911 publication titled The Purchasing Power of Money. In this equation, money supply and velocity are equated to price level and transactions to explain nominal income determination. This theory assumes velocity is constant in the short run.
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