Which of the following identities describes the equation of exchange?
A) M x P = V
B) M = V x P
C) M x V = Y
D) M x V = P x Y
E) Y = P x M x V

Name: Which of the following identities describes the equation of exchange? A) M x P = V B) M = V x P C) M x V = Y D) M x V = P x Y E) Y = P x M x V
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Question

Quizplus · Accepted Answer

The equation of exchange states that money supply (M) multiplied by velocity of money (V) equals price level (P) multiplied by real output (Y). Therefore, the equation is best represented by D: M x V = P x Y.

Which of the Following Identities Describes the Equation of Exchange