Which of the Following Is True About the Equation of Exchange

question 26

Multiple Choice

Which of the following is true about the equation of exchange?

• A)According to the equation of exchange, real GDP is equal to the product of the money supply and velocity of money
• B)According to the equation of exchange, the price level is equal to the product of real GDP and the velocity of money
• C)According to the equation of exchange, the sum of the growth rate of the money supply and the growth rate of price equals the growth rate of real output
• D)According to the equation of exchange, nominal GDP is equal to the product of the money supply and velocity of money
• E)According to the equation of exchange, the sum of the growth rate of the money supply and the growth rate of the velocity of money equals the growth rate of real output

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Definitions:

Standard Hours

The predetermined amount of time expected to be required to complete a task or produce a unit of product under normal conditions.

Actual Rate

Often refers to the real, current exchange rate in currency markets, or the real rate of interest or return on investment.

Quantity Variance

Measures the difference between the actual amount of materials or labor used in production and the amount that should have been used, according to standards.

Standard Price

The predetermined cost of acquiring a product or receiving a service under normal conditions.