The quantity equation states:
A) M ×V = P ×Y.
B) M ×P = Y ×V.
C) P ×V = M ×Y.
D) M ×Y = P ×V

Question

Quizplus · Accepted Answer

The quantity equation (also known as the equation of exchange) is M × V = P × Y, where M is the money supply, V is the velocity of money, P is the price level, and Y is real output. This equation expresses the relationship between the money supply, velocity of money, price level, and real output in an economy. Choice A is the correct representation of this equation.

The Quantity Equation States