If the stock of money is $40 billion, velocity is 3, and real output is $60 billion, what is the price level?
A) 0.5
B) 2
C) 2.5
D) 4

Name: If the stock of money is $40 billion, velocity is 3, and real output is $60 billion, what is the price level? A) 0.5 B) 2 C) 2.5 D) 4
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Question

Quizplus · Accepted Answer

The equation of quantity theory of money is:
MV=PY
where M is the stock of money, V is velocity, P is price level, and Y is real output. 
Plugging in the given values,
40x3= P x 60
P= 2

If the Stock of Money Is $40 Billion, Velocity Is