If the total money supply is $3 trillion, real GDP is $9 trillion and the price level is 2, then the equation of exchange tells us that velocity equals

Question

Quizplus · Accepted Answer

The equation of exchange is given by 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. We can rearrange this equation to solve for V as V = PQ/M.

Using the given values, we have:
M = $3 trillion
P = 2
Q = $9 trillion

Substituting these values into the equation, we get:
V = (2)($9 trillion)/($3 trillion) = 6

Therefore, the velocity of money is 6.

If the Total Money Supply Is $3 Trillion, Real GDP