Last year,Tealandia produced 60 000 bags of green tea,which sold at 5 units each of Tealandia's currency: the leaf.Tealandia's money supply was 10 000.What was the velocity of money in Tealandia?

Question

Last year,Tealandia produced 60 000 bags of green tea,which sold at 5 units each of Tealandia's currency: the leaf.Tealandia's money supply was 10 000.What was the velocity of money in Tealandia?

Quizplus · Accepted Answer

Velocity of money is the number of times a unit of currency is used to purchase goods and services in a given time period. 
The formula for velocity of money is V = (P x Q) / M, where P is the price level, Q is real GDP, and M is the money supply. 
Here, we know that price level and real GDP are not given, so we can assume them to be constant. 
Therefore, V = (P x Q) / M = (60,000 x 5) / 10,000 = 300,000 / 10,000 = 30.
Thus, the velocity of money in Tealandia is 30. 
The correct answer is B.

Last Year,Tealandia Produced 60 000 Bags of Green Tea,which Sold at 5