If an economy produces 2,000 units of output with a price level of $1 and the money supply (M) is $1,000, velocity is:
A) 2.
B) 500.
C) 50.
D) 5.

Name: If an economy produces 2,000 units of output with a price level of $1 and the money supply (M) is $1,000, velocity is: A) 2. B) 500. C) 50. D) 5.
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Quizplus · Accepted Answer

Velocity is calculated as the ratio of nominal GDP to money supply. In this case, nominal GDP is 2,000 * $1 = $2,000. Velocity is therefore $2,000 / $1,000 = 2.

If an Economy Produces 2,000 Units of Output with a Price