The equation of exchange is
A)MV = P.
B)MV = PY.
C)MP = VY.
D)PV = M.
E)Y = M.

Question

Quizplus · Accepted Answer

The equation of exchange is MV = PY, where M is the total amount of money in circulation, V is the velocity of money (how quickly it is spent), P is the price level of goods and services, and Y is the real GDP (output). This equation shows the relationship between the amount of money in circulation, how fast it changes hands, the price level, and the amount of output produced in the economy.

The Equation of Exchange Is