If an economy produces 1,000 units of output when the price level is $1 and the money supply is $500, what is the velocity of money?
A) 2
B) 500
C) 50
D) 5

Name: If an economy produces 1,000 units of output when the price level is $1 and the money supply is $500, what is the velocity of money? A) 2 B) 500 C) 50 D) 5
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Question

Quizplus · Accepted Answer

The velocity of money is calculated as the total transactions (price level * output) divided by the money supply. Here, it is (1,000 * $1) / $500 = 2.

If an Economy Produces 1,000 Units of Output When the Price