equation of exchange states that the quantity of money multiplied by the velocity of money equals:
A)real Gross Domestic Product.
B)the price level.
C)nominal Gross Domestic Product.
D)the turnover rate.
E)the demand for money.

Question

​equation of exchange states that the quantity of money multiplied by the velocity of money equals:
A)real Gross Domestic Product.
B)the price level.
C)nominal Gross Domestic Product.
D)the turnover rate.
E)the demand for money.

Quizplus · Accepted Answer

The equation of exchange is MV=PQ. M is the quantity of money, V is the velocity of money, P is the price level, and Q is the quantity of goods and services produced. Therefore, MV represents nominal GDP, which is the total monetary value of all goods and services produced in an economy. So, the equation of exchange states that nominal GDP equals the quantity of money multiplied by the velocity of money.

​Equation of Exchange States That the Quantity of Money Multiplied

Equation of Exchange States That the Quantity of Money Multiplied