If nominal GDP is $600 billion and, on the average, each dollar is spent three times per year, then the amount of money demanded for transactions purposes will be
A) $1,800 billion.
B) $600 billion.
C) $200 billion.
D) $1,200 billion.

Question

Quizplus · Accepted Answer

The amount of money demanded for transactions purposes is calculated by dividing the nominal GDP by the velocity of money (the average number of times each dollar is spent per year). In this case, $600 billion divided by 3 equals $200 billion.

If Nominal GDP Is $600 Billion And, on the Average