In order to determine the velocity of money, we need to know:
A)the money supply and the price level.
B)nominal GDP and real GDP.
C)the money supply and nominal GDP.
D)the interest rate and nominal GDP.

Question

In order to determine the velocity of money, we need to know:
A)​the money supply and the price level.
B)​nominal GDP and real GDP.
C)​the money supply and nominal GDP.
D)​the interest rate and nominal GDP.

Quizplus · Accepted Answer

The velocity of money is the frequency with which a unit of money is spent in a given time period. It can be calculated as the ratio of nominal GDP to the money supply. Therefore, knowing the money supply and nominal GDP is necessary to determine the velocity of money. The other choices are not directly related to the velocity of money.

In Order to Determine the Velocity of Money, We Need