ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The Monetary Equation of Exchange is
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C+IG+G+Xn
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r = n-Inf
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MV=PQ
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n = r + Infl
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Explanation:
Detailed explanation-1: -…the monetarist theory is the equation of exchange, which is expressed as MV = PQ. Here M is the supply of money, and V is the velocity of turnover of money (i.e., the number of times per year that the average dollar in the money supply is spent for goods…
Detailed explanation-2: -Understanding Monetarist Theory Monetarist theory is governed by a simple formula: MV = PQ, where M is the money supply, V is the velocity (number of times per year the average dollar is spent), P is the price of goods and services and Q is the quantity of goods and services.
Detailed explanation-3: -Thus PQ is the level of nominal expenditures. This equation is a rearrangement of the definition of velocity: V = PQ / M.
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