The Equation of Exchange Is

question 92

Multiple Choice

The equation of exchange is:

• A) AS = AD
• B) Saving = Income - Spending
• C) MV = PQ
• D) AD = C + I_g + G + X_n

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Definitions:

Reserve Ratio

The fraction of depositors' balances that banks have to hold in reserve and not lend out.

Deposit Liabilities

The amounts of money that banks owe to their depositors, stemming from the bank accounts like savings, checking, and time deposits.

Federal Reserve

The central bank of the United States, responsible for setting monetary policy, supervising and regulating banks, and ensuring the stability of the financial system.

Required Reserve Ratio

The fraction of deposits that a bank is required to hold in reserve and not lend out, as mandated by a central banking authority.