In the quantity theory of money, what does the (P) stand for as seen in the equation below? MV = PY
A)period
B)peak
C)product
D)price

Question

Quizplus · Accepted Answer

The P stands for Price
Key Takeaway: In the above equation M stands for quantity of money, P is the price level, Y is the aggregate output and V is velocity or the number of times in a year that a dollar is spent on goods and services. The quantity theory of money states that the money supply has a positive relationship with price levels in an economic system. As the money supply increases, price levels increase as well.

In the Quantity Theory of Money, What Does the (P)