Based on the equation of exchange, the amount of money in the economy is shown by the expression:
A) M = PQ/V.
B) M = V/PQ.
C) M = V(PQ).
D) M = PQ - V.

Question

Quizplus · Accepted Answer

The equation of exchange is represented by M = PQ/V, where M is the money supply, P is the price level, Q is the quantity of goods and services produced, and V is the velocity of money. This equation shows how these variables are related in an economy.

Based on the Equation of Exchange, the Amount of Money