Which of the following is the equation of exchange?
A) MQ=PV.
B) PV=MQ.
C) MP=VQ.
D) MV=PQ.

Question

Quizplus · Accepted Answer

The equation of exchange is MV = PQ, where M is the money supply, V is velocity of money, P is the price level, and Q is the quantity of goods and services produced. This equation reflects the fundamental relationship between money, prices, and economic activity in an economy. Option A is incorrect because it reverses the positions of money and velocity. Option B is incorrect because it maintains the same positions for money and velocity, but swaps their positions with prices and quantities. Option C is incorrect because it swaps the positions of prices and velocity, and maintains the same positions for money and quantities.

Which of the Following Is the Equation of Exchange