Which of the following is false?
A)The money supply times velocity equals the price level times real GDP.
B)If individuals are writing lots of checks on their checking accounts and spending currency as fast as they receive it, velocity will tend to be high.
C)The magnitude of velocity does not depend on the definition of money that is used.
D)Velocity equals nominal GDP divided by the money supply.

Question

Which of the following is false?
A)​The money supply times velocity equals the price level times real GDP.
B)​If individuals are writing lots of checks on their checking accounts and spending currency as fast as they receive it, velocity will tend to be high.
C)​The magnitude of velocity does not depend on the definition of money that is used.
D)​Velocity equals nominal GDP divided by the money supply.

Quizplus · Accepted Answer

The magnitude of velocity does depend on the definition of money that is used because different definitions of money (such as M1, M2, etc.) include different components (like cash, checking deposits, savings deposits, etc.), which can affect how quickly money circulates in the economy.

Which of the Following Is False