Assume the economy is in equilibrium as illustrated by Figure 13.3. Based on the equation of exchange, what is the velocity of money?
A) 10
B) 6
C) 5
D) 20
E) 2

Question

Quizplus · Accepted Answer

The velocity of money is calculated as the ratio of nominal GDP to the money supply. In this case, nominal GDP is $100 and the money supply is $20, so the velocity of money is 10.

Assume the Economy Is in Equilibrium as Illustrated by Figure