If the nominal GDP is $477 billion and the velocity of money is 4.5, then the money supply is
A) $122 billion.
B) $98 billion.
C) $106 billion.
D) $477 billion.

Question

Quizplus · Accepted Answer

The equation of Quantity Theory of Money is:
Nominal GDP = Money Supply x Velocity of Money
Rearranging the formula, we get:
Money Supply = Nominal GDP / Velocity of Money
Plugging in the given values, we get:
Money Supply = 477 billion / 4.5 = 106 billion
Therefore, the answer is choice C.

If the Nominal GDP Is $477 Billion and the Velocity