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:

Stock Dividend

Distribution of additional shares of a company's stock to its shareholders instead of cash.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares.

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Common Stock Dividend Distributable

A liability account on the balance sheet representing a declaration of dividends by a company's board of directors that have not yet been paid out to shareholders.