If the average level of prices in an economy equals 100, the money supply equals $100,000, and the level of real output equals $5,000, then the velocity of money is:
A)5.
B)20.
C)100.
D)1,000.

Name: If the average level of prices in an economy equals 100, the money supply equals $100,000, and the level of real output equals $5,000, then the velocity of money is: A)5. B)20. C)100. D)1,000.
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Question

Quizplus · Accepted Answer

Velocity of money = (Money supply * Price level) / Real output= (100,000 * 100) / 5,000= 2,000,000 / 5,000= 400

If the Average Level of Prices in an Economy Equals