The growth version of the quantity equation can be expressed as:
A) growth rate of money - growth rate of velocity = inflation - real GDP growth.
B) growth rate of money + growth rate of velocity = inflation - real GDP growth.
C) growth rate of money X growth rate of velocity = inflation X real GDP growth.
D) growth rate of money + growth rate of velocity = inflation + real GDP growth.

Question

Quizplus · Accepted Answer

The growth version of the quantity equation is derived from the equation of exchange (MV = PY), where M is money supply, V is velocity, P is price level, and Y is real GDP. In growth terms, it becomes: growth rate of money (M) + growth rate of velocity (V) = inflation (growth rate of P) + real GDP growth (growth rate of Y).

The Growth Version of the Quantity Equation Can Be Expressed