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.

---

Definitions:

Preferred Mix

The optimal combination or assortment of goods, services, investments, or resources desired by an individual, firm, or economy.

Inverted-U Theory

A concept suggesting that there is an optimum level of a variable, beyond which its effect begins to decline or become negative, often applied to the relationship between income inequality and economic development.

Market Concentration Ratio

A measure used to determine the level of competition within a market by analyzing the market share of the largest firms within the industry.

R&D Expenditures

Funds invested by companies or governments in research and development to innovate or improve products, services, or processes.