If the velocity of money in an economy is 7.5, money supply is $350 billion, and the price level is 1.5, the real output is worth

Question

Quizplus · Accepted Answer

Real output is calculated using the equation MV = PQ, where M is the money supply, V is the velocity of money, P is the price level, and Q is real output.

Plugging in the given values,

350 billion x 7.5 = 1.5 x Q

Q = (350 billion x 7.5)/1.5

Q = $1,750 billion.

Therefore, the real output is $1,750 billion.

If the Velocity of Money in an Economy Is 7