If nominal GDP = $15 trillion and the quantity of money is $3 trillion,what is the velocity of circulation?

Question

Quizplus · Accepted Answer

The equation of quantity theory of money is MV=PY, where M is the quantity of money, V is the velocity of circulation, P is the price level, and Y is the real output. We can rearrange this as V=PY/M.

Given nominal GDP (PY) is $15 trillion and the quantity of money (M) is $3 trillion, we can calculate V as follows:

V = PY/M = $15tn/$3tn = 5

Therefore, the velocity of circulation is 5.

If Nominal GDP = $15 Trillion and the Quantity of Money