Last year,Tealandia produced 50,000 bags of green tea.This was Tealandia's only production.Each bag sold at 4 units each of Tealandia's currency-the Leaf.Tealandia's money supply was 10,000.What was the velocity of money in Tealandia?

Question

Quizplus · Accepted Answer

The velocity of money is calculated as the ratio of nominal GDP to the money supply. The nominal GDP is 50,000 bags * 4 Leafs = 200,000 Leafs. The money supply is 10,000 Leafs. Therefore, the velocity of money is 200,000 / 10,000 = 20.

Last Year,Tealandia Produced 50,000 Bags of Green Tea