If the money supply is $100 and the nominal GDP is $1,000, then the velocity of money _____
A) equals 10.
B) equals 4.
C) equals 5.
D) cannot be determined since we do not know anything about prices.
E) cannot be determined since we do not know anything about real GDP.

Question

Quizplus · Accepted Answer

The velocity of money is calculated as the nominal GDP divided by the money supply. In this case, it is $1,000 / $100 = 10.

If the Money Supply Is $100 and the Nominal GDP