If real GDP is $4 billion,the price level is 1.25,and the nominal money stock is $500 million,then velocity is

Question

Quizplus · Accepted Answer

The equation of exchange is MV = PY, where M is the nominal money stock, V is velocity, P is the price level, and Y is real GDP. Rearranging this equation, we can solve for V:

V = PY/M

Plug in the given values:

V = (1.25 x $4 billion) / $500 million

V = 10

Therefore, the answer is C) 10.

If Real GDP Is $4 Billion,the Price Level Is 1