Figure 30-3.On the graph,MS represents the money supply and MD represents money demand.The usual quantities are measured along the axes.
-Refer to Figure 30-3.Suppose the relevant money-supply curve is the one labeled MS₂;also suppose the economy's real GDP is 45,000 for the year.If the money market is in equilibrium,then the velocity of money is approximately

Question

Figure 30-3.On the graph,MS represents the money supply and MD represents money demand.The usual quantities are measured along the axes.

-Refer to Figure 30-3.Suppose the relevant money-supply curve is the one labeled MS₂;also suppose the economy's real GDP is 45,000 for the year.If the money market is in equilibrium,then the velocity of money is approximately

Quizplus · Accepted Answer

In order for the money market to be in equilibrium, the quantity of money supplied must equal the quantity of money demanded. From the graph, we can see that this occurs at a money supply level of MS1 and a corresponding velocity of money of approximately 9.0 (which can be determined by dividing the level of real GDP, 45,000, by the level of money supply, MS1). So, the correct answer is C) 9.0.