Which of the Following Identities Describes the Equation of Exchange

question 187

Multiple Choice

Which of the following identities describes the equation of exchange?

• A) money in circulation × prices = velocity × income
• B) money in circulation × income = velocity × prices
• C) real GDP = money in circulation × velocity
• D) nominal GDP = money in circulation × velocity
• E) real GDP = prices × money in circulation × velocity

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Definitions:

Coconut Consumption

The act of using coconuts, either by eating or in the production of products such as oil, within an economic system.

Competitive Market

A market structure characterized by a large number of buyers and sellers, so no single participant has significant market power.

Profit Maximization

The operation by which businesses deduce the pricing and quantity of output that maximizes profit gains.

Ore

Naturally occurring minerals or rock from which valuable metals or other elements can be extracted profitably.