In the equation of exchange, the variable whose value must be computed from the other variables is the
A) price level.
B) quantity of output.
C) quantity of money.
D) velocity of money.

Question

Quizplus · Accepted Answer

In the equation of exchange, the other variables (price level, quantity of output, and quantity of money) are typically observable or at least more easily measured than the velocity of money, which represents the speed at which money changes hands in the economy. Therefore, the velocity of money is the variable that must be computed from the other variables.

In the Equation of Exchange, the Variable Whose Value Must