Written by the Fiveable Content Team • Last updated August 2025
Verified for the 2027 exam
Verified for the 2027 exam•Written by the Fiveable Content Team • Last updated August 2025
Definition
The equation of exchange in the quantity theory of money, where M is money supply, V is velocity of money, P is price level, and Y is real output; used to show the relationship between money supply and nominal GDP.