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Chapter 15: 29 (page 379)

What is the basic quantity equation of money?

Short Answer

Expert verified

The formula for basic quantity equation of money is

MV=PQ

Step by step solution

01

Step 1:Definition

The quantity theory of money in economics suggests that the cost level and money supply in the economy are directly proportional to one another

02

Explain the Equation

The formula is

MV=PQ

M- money supply

V- the velocity of money

P-price level

Q- the real output of the economy

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What is the basic quantity equation of money?

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