Figure 30-2.On the graph,MS represents the money supply and MD represents money demand.The usual quantities are measured along the axes.
-Refer to Figure 30-2.Suppose the relevant money-demand curve is the one labeled MD₁;also suppose the velocity of money is 4.If the money market is in equilibrium,then the economy's real GDP amounts to

Question

Figure 30-2.On the graph,MS represents the money supply and MD represents money demand.The usual quantities are measured along the axes.

-Refer to Figure 30-2.Suppose the relevant money-demand curve is the one labeled MD₁;also suppose the velocity of money is 4.If the money market is in equilibrium,then the economy's real GDP amounts to

Quizplus · Accepted Answer

According to the graph, the equilibrium point where MS intersects with MD₁ is at a value of $10,000 for the money supply. Given that the velocity of money is 4, we can calculate the nominal GDP as (money supply) x (velocity of money) = $10,000 x 4 = $40,000. However, the question asks for real GDP, so we need to divide by the price level. Since we don't have information about the price level, we can't calculate the exact value of real GDP. However, we know that nominal GDP is $40,000 and if the price level is less than 4,000, real GDP must be greater than 10,000 (since $40,000 / 4,000 = 10, which is the value of real GDP when the price level is 4,000). Therefore, the best answer is C.