If money supply is $800 billion and nominal GDP is $2 trillion, then the average number of times that money is spent and changes hands is
A) 2.5 times per year.
B) 2 times per year.
C) 1.6 times per year.
D) 16 times per year.

Question

Quizplus · Accepted Answer

The velocity of money is calculated as nominal GDP divided by the money supply. Here, $2 trillion / $800 billion = 2.5 times per year.

If Money Supply Is $800 Billion and Nominal GDP Is