If the total money supply is $3 trillion, real GDP is $8 trillion and the price level is 1.5, then the equation of exchange tells us that velocity equals

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The equation of exchange is MV = PY, where M is the money supply, V is velocity, P is the price level, and Y is real GDP. Plugging in the values: $3 trillion * V = 1.5 * $8 trillion, solving for V gives V = 4.

If the Total Money Supply Is $3 Trillion, Real GDP