In order to appreciate the richness of Fisher’s presentation of the quantity theory,
those factors which operate essentially in the long run to affect velocity will be examined first; second, the short-run determinants of velocity will be reviewed; and third, the interdependence which exists among the variables in the Equation of Exchange will be investigated. An examination of point three will show that Fisher did not assert that the general level of commodity prices must very in strict proportion to changes in the stock of money. However, while factors other than money in the Equation of Exchange might affect the price level, thus qualifying the proposition of rigid proportionality, Fisher’s discussion implied that they were of secondary importance, for substantial changes in the price level, in his view, could only occur through a change in the money supply.
implies