If the stock of money is $250 billion, velocity is 5, and the price level is 10, what is real output?
A) $5 billion
B) $125 billion
C) $500 billion
D) $12,500 billion

Question

Quizplus · Accepted Answer

Real output can be calculated using the equation of exchange: MV = PY, where M is the money supply, V is the velocity, P is the price level, and Y is the real output. Plugging in the values: $250 billion * 5 = 10 * Y, solving for Y gives $125 billion.

If the Stock of Money Is $250 Billion, Velocity Is