In Fisher's equation of exchange, if technological innovation reduces transaction frequency without affecting real output, the immediate…

CA Foundation · Business Economics · MTP · January 2026
In Fisher's equation of exchange, if technological innovation reduces transaction frequency without affecting real output, the immediate impact-ceteris paribus-would be on:
(A) A. Price level only
(B) B. Velocity of circulation only
(C) C. Money supply only
(D) D. Both velocity and price level

Suggested Answer and Working Notes:

Correct Answer: Option (D)

D. Both velocity and price level

Topics: Money Market

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