Principles of Macroeconomics / Unit 12 MAC 1130 short lesson, about 20 seconds
Velocity and the Equation of Exchange
Captions available
The idea
Velocity is how many times the money supply is spent in a period: nominal GDP divided by the money supply. Rearranged, money times velocity equals the price level times real output.
In practice
Written out, M times V equals P times Y, and Y is real output.
Where people slip
The anchor writes the last term as Q. Same quantity, different letter.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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