If the money supply is $180 billion and the economy's nominal GDP is $540 billion,then the:

Question

Quizplus · Accepted Answer

The equation of exchange states that M x V = P x Y, where M is the money supply, V is the velocity of money, P is the average price level, and Y is the real GDP.

Using this equation, we can solve for the velocity of money:

M x V = P x Y 
V = (P x Y) / M

Substituting in the given values: 
V = ($540 billion) / ($180 billion) 
V = 3

Therefore, the velocity of money is 3. None of the other answer choices are correct, as they are either irrelevant to the given information or based on incorrect calculations.

If the Money Supply Is $180 Billion and the Economy's