What equation represents the relationship between money, velocity, and nominal GDP?

The Quantity Equation is the correct answer as it is fundamentally represented by the equation MV = PQ, where M stands for the money supply, V stands for the velocity of money, P is the price level, and Q represents the quantity of goods and services produced, which corresponds to nominal GDP. This equation demonstrates how the total amount of money in circulation (M) and the speed at which that money is used (V) contributes directly to the overall economic output as measured by nominal GDP (PQ).

This relationship indicates that if either the money supply grows or the velocity of money increases, it can lead to higher nominal GDP, provided that the other factors are held constant. This equation is central in the study of macroeconomics as it encapsulates how money functions within an economy and reflects the interactions between monetary policy and overall economic performance. Other options listed do not provide this specific relationship between money, velocity, and nominal GDP, making them less relevant in this context.