The Equation of Exchange Indicates That
A) $M Q \text { equals } V P \text {. }$

question 53

Multiple Choice

The equation of exchange indicates that

• A) \(M Q \text { equals } V P \text {. }\)
• B) the velocity of money and the supply of money vary proportionately with one another.
• C) other things being equal, an increase in V will increase \(P \text { and/or } Q \text {. }\)
• D) other things being equal, M and P are inversely related.

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Definitions:

Time Costs

The opportunity costs associated with the time spent on an activity instead of other, potentially more valuable, activities.

Transaction Costs

Expenses incurred in making an economic exchange, including search, bargaining, and enforcement of contracts.

Volume Of Trade

The total quantity of shares or contracts traded for a specified financial instrument or market within a specified period.

Gains From Trade

The increase in utility or welfare that countries or individuals obtain by engaging in voluntary exchange of goods and services.