Answer the following questions:
a.What is the equation of exchange? Explain each component.
b.What assumptions are placed on the equation of exchange to generate the quantity theory of money?
c.Explain the quantity theory of money and what it implies about the impact of changes in the money supply on real output and prices.

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The Answer of Answer the following questions:
a.What is the equation of exchange? Explain each component.
b.What assumptions are placed on the equation of exchange to generate the quantity theory of money?
c.Explain the quantity theory of money and what it implies about the impact of changes in the money supply on real output and prices.

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