The quantity equation is derived from:
A) the definition of economics.
B) the definition of real GDP.
C) the definition of money.
D) the definition of velocity.

Question

Quizplus · Accepted Answer

The quantity equation, MV = PY, is derived from the definition of velocity, where M is the money supply, V is the velocity of money, P is the price level, and Y is the real GDP. Velocity (V) is defined as the rate at which money circulates in the economy, linking the money supply to nominal GDP.

The Quantity Equation Is Derived From