The equation that says money times velocity equals total spending is known as
A)the national income identity.
B)purchasing-power parity.
C)a covenant.
D)the equation of exchange.

Question

Quizplus · Accepted Answer

The equation that relates money, velocity, and total spending is known as the equation of exchange, which shows that total spending in an economy is determined by the amount of money in circulation multiplied by the velocity of money. The other options (A, B, and C) are not related to this equation. The national income identity refers to the equality between national income and national output, while purchasing-power parity refers to the idea that exchange rates should adjust to equalize the prices of goods and services in different countries, and a covenant is a type of contractual agreement.

The Equation That Says Money Times Velocity Equals Total Spending