The Equation of Exchange Always Holds Because

question 23

Multiple Choice

The equation of exchange always holds because

• A) the quantity of money is determined by the amount of spending on goods and services.
• B) the quantity of money dictates the size of nominal GDP, since money is a social usage.
• C) the number of times money is spent to obtain goods and services measures total spending on GDP.
• D) MV measures total spending on GDP and PY also measures of total spending on GDP.

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Definitions:

Cash Discount

A reduction in the price paid for goods or services if payment is made in cash or within a certain time period.

Balance Sheet Hedge

A financial strategy used to limit or offset the risk of currency exchange rate fluctuations affecting a company's balance sheet.

Exchange Rates

The value of one currency for the purpose of conversion to another.

Challenges

Situations that present difficulty, requiring a solution or adaptation.