The equation of exchange shows the relationship between:
A) prices, output, the money supply, and illusion.
B) money neutrality, output, and velocity.
C) the money supply, velocity, and nominal GDP.
D) the money supply and money demand.

Question

Quizplus · Accepted Answer

The equation of exchange is represented as MV = PQ, where M is the money supply, V is the velocity of money, P is the price level, and Q is the output (real GDP), making PQ the nominal GDP. This equation shows the relationship between the money supply, velocity, and nominal GDP.

The Equation of Exchange Shows the Relationship Between