The equation of exchange indicates that
A)MQ equals VP.
B)the velocity of money and the supply of money vary proportionately with one another.
C)other things being equal, an increase in V will increase P and/or Q.
D)other things being equal, M and P are inversely related.

Question

Quizplus · Accepted Answer

The equation of exchange is MV = PQ, where M is the money supply, V is the velocity of money, P is the price level, and Q is the quantity of goods and services produced. If V increases, then either P or Q must increase if M is constant.

The Equation of Exchange Indicates That