If nominal GDP is $4,000 billion and the amount of money demanded for transactions purposes is $800 billion, it can generally be concluded that:
A) The asset demand for money is $3,200 billion
B) The total demand for money is $4,800 billion
C) On average, each dollar will be spent five times a year
D) The supply of money needs to be increased to meet the demand

Question

Quizplus · Accepted Answer

The velocity of money is calculated as nominal GDP divided by the money demanded for transactions. Here, $4,000 billion / $800 billion = 5, indicating each dollar is spent five times a year.

If Nominal GDP Is $4,000 Billion and the Amount of Money