Monthly Archives: May 2016

Disaggregating the Equation of Exchange

The equation of exchange states that MV=PQ. As formulated by Friedman, the equation is stated as MV=PY. Money times velocity equals the price level times total output Q, or total income Y, or transactions T, which are the same in what might be called a “closed” economy. Let me further explain this simple tautology. All […]