Suppose that P × Y is $5,000 million a year and the quantity of money is $500 million.Then the velocity of circulation is
A) 50.
B) 500.
C) 10.
D) 20.
E) 2,500,000.

Question

Quizplus · Accepted Answer

The velocity of circulation (V) is calculated using the formula V = (P × Y) / M, where P × Y is the nominal GDP and M is the quantity of money. Here, V = $5,000 million / $500 million = 10.

Suppose That P × Y Is $5,000 Million a Year