What is the equation of exchange?
A) QS = QD
B) P × V = M × Y
C) M × V = P × Y
D) C × I = Y × G

Question

What is the equation of exchange?  
A) QS = QD 
B) P × V = M × Y 
C) M × V = P × Y 
D) C × I = Y × G

Quizplus · Accepted Answer

The equation of exchange is represented by M × V = P × Y, where M represents the supply of money, V represents the velocity of money, P represents the price level, and Y represents the real GDP of the economy. This equation shows the relationship between the total money supply, the velocity at which it circulates in the economy, the price level of goods and services, and the real economic output.

What Is the Equation of Exchange