According to the equation of exchange, if the money supply is $800 million, real GDP is $3, 000 million, and nominal GDP is $4, 000 million, then the velocity of money is equal to:

Question

Quizplus · Accepted Answer

The equation of exchange is MV = PQ, where M is the money supply, V is the velocity of money, P is the price level, and Q is the real GDP. Nominal GDP (PQ) is given as $4,000 million. Using the equation, V = PQ/M = $4,000 million / $800 million = 5.

According to the Equation of Exchange, If the Money Supply