The concept that shows the relationship among GDP,the money stock,and the velocity of circulation of money is called the

A) law of diminishing marginal utility.
B) equation of exchange.
C) law of demand.
D) law of diminishing returns.
E) the quantity theory of money.

Equation of Exchange

Shows the relationship among four variables: M (the money supply), V (velocity of circulation), P (the price level), and Q (the quantity of goods and services produced). MV = PQ.

Quantity Theory of Money

A theory suggesting that the general price levels of goods and services are directly proportional to the money supply in an economy.