QuestionJune 14, 2025

35. Which of the variables in the Equation of Exchange (MVDPQ) is the one that matters because it is the only one that is real? a) M b) V c) P d) Q

35. Which of the variables in the Equation of Exchange (MVDPQ) is the one that matters because it is the only one that is real? a) M b) V c) P d) Q
35. Which of the variables in the Equation of Exchange (MVDPQ) is the one that matters because it is the only one that is real?
a) M
b) V
c) P
d) Q

Solution
4.7(200 votes)

Answer

d) Q Explanation 1. Identify the Real Variable In the Equation of Exchange, MV = PQ, where M is money supply, V is velocity of money, P is price level, and Q is real output. Among these, Q represents real output or quantity of goods and services produced, making it the only real variable.

Explanation

1. Identify the Real Variable<br /> In the Equation of Exchange, $MV = PQ$, where $M$ is money supply, $V$ is velocity of money, $P$ is price level, and $Q$ is real output. Among these, $Q$ represents real output or quantity of goods and services produced, making it the only real variable.
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