Suppose the public holds $200 billion in M2 and the velocity of the M2 money supply is 5. What is the value of nominal GDP?
A) $500.
B) $1,000.
C) $1,500.
D) That information cannot be determined.

Question

Quizplus · Accepted Answer

The nominal GDP can be calculated using the formula: Nominal GDP = Money Supply (M2) * Velocity. Here, Nominal GDP = $200 billion * 5 = $1,000 billion.

Suppose the Public Holds $200 Billion in M2 and the Velocity