The equation of exchange is a states that the money supply times velocity equals nominal national income, an accounting identity and is always correct, and states that expenditures by some people equal income received by others.
The exchange equation is M V P Q. The velocity is the typical annual rate at which a dollar is spent to purchase final goods and services.
The monetarist theory is represented by the equation of exchange, MV = PQ. Here, M is the total amount of money available, and V denotes the velocity of money turnover or the frequency with which the average dollar in the money supply is spent on products on a yearly basis.
T stands for all the products and services exchanged. The exchange equation is an identity equation, meaning that MV is exactly equivalent to PT (or that MV = PT). The equation must always be accurate in the ex-post, or factual, sense.
Hence the correct option is D
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