Figure 30-3
On the following graph, MS represents the money supply and MD represents money demand.
-Refer to Figure 30-3. Suppose the relevant money-supply curve is the one labeled MS₂; also suppose the economy's real GDP is 65,000 for the year. If the market for money is in equilibrium, then the velocity of money is approximately

Question

Figure 30-3
On the following graph, MS represents the money supply and MD represents money demand. Figure 30-3 On the following graph, MS represents the money supply and MD represents money demand. -Refer to Figure 30-3. Suppose the relevant money-supply curve is the one labeled MS<sub>2</sub>; also suppose the economy's real GDP is 65,000 for the year. If the market for money is in equilibrium, then the velocity of money is approximately A) 2.0. B) 14.3. C) 2.9. D) 0.35.

Figure 30-3 On the following graph, MS represents the money supply and MD represents money demand. -Refer to Figure 30-3. Suppose the relevant money-supply curve is the one labeled MS<sub>2</sub>; also suppose the economy's real GDP is 65,000 for the year. If the market for money is in equilibrium, then the velocity of money is approximately A) 2.0. B) 14.3. C) 2.9. D) 0.35.

-Refer to Figure 30-3. Suppose the relevant money-supply curve is the one labeled MS₂; also suppose the economy's real GDP is 65,000 for the year. If the market for money is in equilibrium, then the velocity of money is approximately

Quizplus · Accepted Answer

The velocity of money is calculated as nominal GDP divided by the money supply. In this case, nominal GDP is equal to real GDP (65,000) times the price level (1). The money supply is equal to MS2, which is 4,500. Therefore, the velocity of money is 65,000 / 4,500 = 14.3.

Figure 30-3 on the Following Graph, MS Represents the Money Supply and Supply