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Equation of exchange

Equation of exchange - had introduced bank money or...

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Equation of exchange Equation of exchange , therefore, may be viewed as an identity : the market value of all goods and services must be equal to the supply of money multiplied by the velocity of the circulation of one unit of currency. Fisher has also presented an extended version of the equation of exchange. For this purpose he
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Unformatted text preview: had introduced bank money or credit (M 1 ) and its velocity or circulation (V 1 ). The equation of exchange in its full form can then be stated as: MV + M 1 V 1 = PT But it can be assumed that MV includes both currency and credit money and hence it can be stated in its simplified form: MV = PT...
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