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The transaction demand for money in an economy can be written in the following form as,

1k.Mtd=T\frac{1}{k}.M_t^d = T, or v.Mtd=Tv.M_t^d = T

in the above expression v refers to:

Solution

✅ Correct Option: 1

In v⋅Mtd=Tv \cdot M_t^d = T, where v=1kv = \frac{1}{k}, the symbol vv denotes the velocity of circulation of money, i.e. the number of times a unit of money changes hands during the period. TT is the total value of nominal transactions and MtdM_t^d is transaction demand for money.

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