If the stock of money is $60 billion, velocity is 5, and real output is $100 billion, what is the price level?
A) 0.12
B) 1.4
C) 3
D) 6

Name: If the stock of money is $60 billion, velocity is 5, and real output is $100 billion, what is the price level? A) 0.12 B) 1.4 C) 3 D) 6
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Question

Quizplus · Accepted Answer

Quantity equation: MV=PQ
where M is the stock of money, V is velocity, P is the price level, and Q is real output.
Plugging in the given values: 
60(5) = P(100)
P= $3000/$100 billion = 3. Therefore, the price level is 3.

If the Stock of Money Is $60 Billion, Velocity Is