   # “A monetarist investigator might say that the sewer flow of 6,000 gallons an hour consisted of an average of 200 gallons in the sewer at any one time with a complete turnover of the water 30 times every hour.” 1 Interpret this statement using the equation of exchange. ### Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040

#### Solutions

Chapter
Section ### Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040
Chapter 26, Problem 6SQP
Textbook Problem
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## “A monetarist investigator might say that the sewer flow of 6,000 gallons an hour consisted of an average of 200 gallons in the sewer at any one time with a complete turnover of the water 30 times every hour.”1 Interpret this statement using the equation of exchange.

To determine

The interpretation of statement using the equation of exchange.

### Explanation of Solution

The equation of exchange (quantity theory of money) is expressed as MV=PQ, where M indicates the money supply, V indicates velocity, P indicates the general price level, and Q is the aggregate output.

In the given situation, the average gallon of water is equal to M and the turnover of water is considered velocity. The total flow indicates PQ

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