The Equation of Exchange States That the Price Level Is

question 429

Multiple Choice

The equation of exchange states that the price level is equal to

• A) the quantity of money.
• B) velocity of circulation multiplied by the quantity of money divided by real GDP.
• C) real GDP multiplied by the velocity of circulation divided by nominal GDP.
• D) the velocity of circulation.

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Definitions:

Voucher

A document or record that verifies a transaction and authorizes the payment or receipt of funds.

Journal

A record where all financial transactions are initially entered in chronological order.

Bank Reconciliation

The process of matching the balances in an entity's accounting records for a cash account to the corresponding information on a bank statement.

Balance Per Books

The ending balance of an account as recorded in the financial records of a company or individual.