The money supply in Freedonia is $100 billion. Nominal GDP is $800 billion, and real GDP is $200 billion. What is the price level in Freedonia?

Name: The money supply in Freedonia is $100 billion. Nominal GDP is $800 billion, and real GDP is $200 billion. What is the price level in Freedonia?
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Question

Quizplus · Accepted Answer

The equation for calculating the price level is: 
Price Level = Nominal GDP / Real GDP 
Price Level = $800 billion / $200 billion 
Price Level = 4 
Therefore, the correct answer is option C).

The Money Supply in Freedonia Is $100 Billion