DBC 2337 - Equation of Exchange

 

The Banking Tutor 

Daily Banking Concept -  2337 

Equation of Exchange 

The equation of exchange is an economic identity that shows the relationship between the money supply, the velocity of money, the price level, and an index of expenditures. 

It says that the total amount of money that changes hands in the economy will always equal the total money value of the goods and services that change hands in the economy.