The equation of exchange ________.
A)states that the quantity of money multiplied by velocity must equal nominal income in a given year
B)describes a relationship that is true by definition
C)shows that real GDP must equal real money balances times the number of times a dollar turns over in a year
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The equation of exchange states that the quantity of money multiplied by velocity must equal nominal income in a given year, which is true by definition. It also shows that real GDP must equal real money balances times the number of times a dollar turns over in a year. Therefore, all of the above statements are correct.

The Equation of Exchange ________