In the quantity theory of money, what does the (P) stand for as seen in the equation MV = PY?
A)Period
B)Peak
C)Product
D)Price

Question

Quizplus · Accepted Answer

The P stands for price.
Key Takeaway: In the above equation, M stands for quantity of money and P is the price level. Y is the aggregate output and V is velocity, or the number of times in a year that a dollar is spent on goods and services. The quantity theory of money states that the money supply has a positive relationship with price levels in an economic system. As the money supply increases, price levels increase as well.

In the Quantity Theory of Money, What Does the (P)