The quantity equation is expressed as
A) MV = Py.
B) MP = Vy.
C) M/V = P/y.
D) M+V = P+y.

Question

Quizplus · Accepted Answer

The quantity equation, also known as the equation of exchange, is expressed as MV = Py, where M is the money supply, V is the velocity of money, P is the price level, and y is the real output. This equation shows the relationship between the elements of the economy and is based on the principle that the total amount spent on goods and services (MV) must be equal to the total value of goods and services produced (Py).

The Quantity Equation Is Expressed as