Which of the following equations represents the equation of exchange?
A) MV = PY
B) MY = PV
C) PM = VY
D) M = VP/Y

Question

Quizplus · Accepted Answer

The equation of exchange is MV = PY, where M is the money supply, V is the velocity of money, P is the price level, and Y is real output. This equation describes the relationship between the quantity of money in an economy (M), the number of times that money is spent in a year (V), the overall price level of goods and services (P), and the real output or Gross Domestic Product (GDP) in the economy (Y).

Which of the Following Equations Represents the Equation of Exchange