The Equation of Exchange

question 61

Multiple Choice

The equation of exchange

• A)states that the price level times velocity equals GDP divided by the interest rate
• B)states that total spending equals real GDP
• C)states that money supply times velocity equals real GDP
• D)is an identity,not a theory
• E)becomes the quantity theory of money on the assumption that the price level is always constant

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Definitions:

Capitalism

An economic system characterized by private ownership of the means of production and the creation of goods or services for profit in a competitive market.

Karl Marx

A 19th-century philosopher, economist, and revolutionary socialist whose works, including the Communist Manifesto, have had a profound impact on political theory and sociology.

Émile Durkheim

A French sociologist best known for his foundational work in sociology and for his theories on the social causes of suicide.

Herbert Spencer

A British philosopher, biologist, anthropologist, and sociologist known for applying evolutionary theory to social evolution and for coining the term "survival of the fittest."