If nominal GDP is $954 billion and velocity is 9, then the money supply:
A)is $106 billion.
B)is $122 billion.
C)is $98 billion.
D)is greater than $8 trillion.

Question

If nominal GDP is $954 billion and velocity is 9, then the money supply:
A)​is $106 billion.
B)​is $122 billion.
C)​is $98 billion.
D)​is greater than $8 trillion.

Quizplus · Accepted Answer

The money supply can be calculated using the formula for velocity of money: Velocity = Nominal GDP / Money Supply. Rearranging this formula to solve for the money supply gives Money Supply = Nominal GDP / Velocity. Substituting the given values, Money Supply = $954 billion / 9 = $106 billion.

If Nominal GDP Is $954 Billion and Velocity Is 9