If M Stands for the Money Supply, V for the Velocity

question 128

Multiple Choice

If M stands for the money supply, V for the velocity of money, P for the average selling price, and Q for the output of goods and services, the equation of exchange is:

• A) MP = VQ.
• B) MV = PQ.
• C) MQ = VP.
• D) MP = PQ.

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Definitions:

Markup

The amount added to the cost of a product to determine its selling price, usually expressed as a percentage of the cost.

Differential Analysis

The process of comparing the costs and benefits of alternative business decisions.

Processing Cost

The expenses incurred in the course of transforming raw materials into finished products.

Differential Income

Definition: The difference in income between two alternative business decisions, focusing on the incremental or additional revenue generated.