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Facilitated diffusion
Equation of Exchange
Shows the relationship among four variables: M (the money supply), V (velocity of circulation), P (the price level), and Q (the quantity of goods and services produced). MV = PQ.
Quantity Theory of Money
A theory suggesting that the general price levels of goods and services are directly proportional to the money supply in an economy.
Equation of Exchange
An economic equation that represents the relationship between money supply, its velocity, price level, and the volume of transactions in an economy.
Velocity of Circulation
A measure of the rate at which money is exchanged in an economy, typically calculated as the ratio of nominal GDP to the money supply.
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