The formula to compute the velocity of money is: A) (P × Y_{real GDP}) / M. B) real GDP / M. C) M × Y_{real GDP} / P. D) P / M × Y_{real GDP}.

Question

Quizplus · Accepted Answer

The velocity of money is calculated as (P × Y) / M, where P represents the price level, Y represents real GDP, and M represents the money supply. Choice A correctly represents this formula, with "P × Y" indicating the product of the price level and real GDP, and "M" representing the money supply.

The Formula to Compute the Velocity of Money Is