If nominal GDP is $5 trillion and velocity is 20,then

Name: If nominal GDP is $5 trillion and velocity is 20,then
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Quizplus · Accepted Answer

The equation of exchange states that MV = PQ, where M is the money supply, V is velocity, P is the price level, and Q is real GDP. Solving for M, we get M = PQ/V. Plugging in the values given, we get M = ($5 trillion)/20 = $250 billion. This represents the actual money balances held by the nonbanking public. Therefore, choice A is the correct answer.

If Nominal GDP Is $5 Trillion and Velocity Is 20,then