According to the equation of exchange, the money supply multiplied by the average number of times per year a dollar is spent on final goods and services is equal to:
A) marginal spending.
B) unemployment.
C) total spending.
D) price level.

Question

Quizplus · Accepted Answer

The equation of exchange is represented as M*V = P*T, where M is the money supply, V is the velocity of money (average number of times per year a dollar is spent on final goods and services), P is the price level, and T is the volume of transactions in the economy. The product of M and V equals total spending in the economy, making option C correct.

According to the Equation of Exchange, the Money Supply Multiplied