If nominal GDP is $10 trillion,and velocity is 10,the money supply is
A)$1 trillion.
B)$5 trillion.
C)$10 trillion.
D)$100 trillion.

Question

Quizplus · Accepted Answer

According to the equation of exchange, MV = PY
where M is the money supply, V is the velocity of money, P is the price level, and Y is the real output or GDP.

We can rearrange this equation to solve for M as follows:
M = PY/V

Given that nominal GDP (PY) is $10 trillion and velocity (V) is 10, we can substitute these values into the equation to find the money supply (M):
M = $10 trillion / 10 = $1 trillion

Therefore, the correct answer is A) $1 trillion.

If Nominal GDP Is $10 Trillion,and Velocity Is 10,the Money