According to the equation of exchange,the money supply times the velocity of money equals the
A) price level.
B) growth rate of the money supply.
C) real GDP.
D) nominal GDP.

Question

Quizplus · Accepted Answer

According to the equation of exchange, M x V = P x Y, where M represents the money supply, V represents the velocity of money, P represents the price level, and Y represents real GDP. Solving for nominal GDP, we get Y x P, which means that the money supply times the velocity of money equals nominal GDP. Therefore, the best choice is D) nominal GDP.

According to the Equation of Exchange,the Money Supply Times the Velocity