What is not consistent with the quantity theory of money is

( ) is not a quantity theory of money.

A.? Assumes that the economy is at full employment.

B.? The velocity of money circulation is unpredictable.

C.? The nominal money supply is assumed to be proportional to changes in the price level.

D.? Inflation is assumed to be caused by excessive growth in the money supply.

Answer:Answer:B.

Answer:Quantity theory of money assumes that the velocity of money circulation is a constant determined by the system; Keynesianism assumes that the velocity of money circulation is variable; modern monetarism assumes that the velocity of money circulation is fairly stable.

The three main theories of the demand for money are as follows:

1. Traditional quantity theory of money.

(1) The quantity theory of cash transactions.

In the early 20th century, Irving Fisher put forward the transaction equation: MV = PY. According to Fisher, the velocity of money circulation can be regarded as a constant. Real national income also remains constant. So changes in the money supply will be fully reflected in price changes. Ms=1/v*PY The above equation is the money demand function derived from the traditional quantity theory of money. It can be seen that the demand for money depends on nominal national income.

(2) Quantity theory of cash balances.

In the study of the demand for money, the Cambridge School emphasizes the behavior of the micro subjects. The Cambridge school believes that, all other things being equal, for each individual, the nominal demand for money and the nominal level of income always maintains a relatively stable proportional relationship between the whole economic system is also the same. The Cambridge equation is Ms=kPY. k is a proportionality coefficient representing the proportion of nominal national income that people are willing to hold in the form of money.

2. Keynes' theory of the demand for money.

(1) Motives for money demand.

Keynes's theory of the demand for money starts from people's motives for holding money. He categorized people's motives for holding money into transaction motives, precautionary motives and speculative motives.

The demand for money generated by the transaction motive and the preventive motive is a function of income, and the demand for money generated by the speculative motive is a function of the interest rateThe transaction motive, which refers to people's demand for transactions for the convenience of day-to-day transactions, and this type of expenditure is obviously affected by the level of income, and in the case of an individual, for example, the higher the income, then the higher the fixed expenditure that the individual is willing to pay each month, which can be concluded that: the transaction motive under the The demand for money is an increasing function of the level of incomeThe precautionary motive, also known as the prudential motive, refers to the need for people to keep a portion of their money for unanticipated payments.?

(2) The development of Keynesian money demand.

The Baumol-Tobin model (square root law) is a development of the Keynesian theory of the demand for money in terms of the transactional motive. The central idea of the Baumol-Tobin model: minimizing the cost of holding money (lost interest rate income, cost of going to the bank). It describes the individual's demand for monetary assets, which depends positively on expenditures and negatively on interest rates. "The square root formula shows that the transactional demand for money varies positively with income and negatively with interest rates.

3. Friedman's theory of the demand for money.

Friedman believes that people in the many assets in the choice of money, as in the many commodities in the choice, therefore, people's demand for money can be analyzed with the help of consumer choice theory to carry out. The amount of money people hold is influenced by the following factors:

(1) Total wealth.

(2) The division of wealth into human and non-human forms.

(3) The expected rate of return for holding money.

(4) The expected rate of return on other assets, i.e., the opportunity cost of holding money.

(5) The utility that holding money gives people.