If the money supply is $1 million, the velocity of money is 10, and the price level is 100, what is real GDP?

Name: If the money supply is $1 million, the velocity of money is 10, and the price level is 100, what is real GDP?
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Question

Quizplus · Accepted Answer

Using the equation of the quantity theory of money (MV = PY), we can solve for real GDP by rearranging the equation to Y = MV/P. Plugging in the given values, we get:

Y = (1 million x 10)/100
Y = 100,000

Therefore, real GDP is $100,000.

If the Money Supply Is $1 Million, the Velocity of Money