Dividing nominal gross domestic product (GDP) by the money supply (M) is a way to obtain the
A) velocity of money.
B) monetary multiplier.
C) equation of exchange.
D) monetary rule.

Question

Quizplus · Accepted Answer

Dividing nominal GDP by the money supply gives us the velocity of money, which measures how many times a dollar is spent in a given period of time. The formula is expressed as V = GDP/M.

Dividing Nominal Gross Domestic Product (GDP) by the Money Supply