According to the equation of exchange, if real Gross Domestic Product (GDP) is $25 billion, the money supply is $10 billion, and the price index equals 2, then the income velocity of money is

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The equation of exchange is MV = PQ, where M is the money supply, V is the velocity of money, P is the price level, and Q is the real GDP. Given M = $10 billion, P = 2, and Q = $25 billion, we solve for V: V = PQ/M = (2 * 25) / 10 = 50 / 10 = 5.

According to the Equation of Exchange, If Real Gross Domestic