The equation of exchange emphasizes the connection between changes in:
A) taxes and changes in inflation and/or output.
B) government purchases and changes in inflation and/or output.
C) interest rates and changes in a nation's inflation and/or unemployment.
D) the money supply and changes in inflation and/or output.

Question

Quizplus · Accepted Answer

The equation of exchange, often represented as MV = PQ, highlights the relationship between the money supply (M) and velocity of money (V) on one side, and the price level (P) and quantity of output (Q) on the other. It suggests that changes in the money supply can lead to changes in inflation (through changes in the price level) and/or changes in output.

The Equation of Exchange Emphasizes the Connection Between Changes In