Nominal GDP, PY, is $7.5 trillion. The quantity of money is $3 trillion. The velocity of circulation is
A) 22.5.
B) 3.
C) 2.5.
D) 10.5.

Question

Quizplus · Accepted Answer

Using the equation of quantity theory of money,
MV = PY, where M is the quantity of money, V is the velocity of circulation, P is the price level, and Y is real output.

Rearranging the equation to solve for V, we get: 
V = PY/M

Substituting the given values, we have:
V = 7.5 trillion / 3 trillion 
V = 2.5

Therefore, the answer is C) 2.5.

Nominal GDP, PY, Is $7