The Equation for Money Demand Expressed in the Chapter That $M^{d}=\frac{1}{V} P Y$

question 24

Essay

The equation for money demand expressed in the chapter that is derived from the equation of exchange is:
$M^{d}=\frac{1}{V} P Y$
We see that the equation does not explicitly address the interest rate. In fact, Professor Fisher assumed that velocity is constant which means 1/V is also a constant. Why do you think Professor Fisher left the interest rate out of the equation? Do you think he would if he were alive today? Explain.

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