The velocity of money is 4. If nominal GDP is $1,200 billion then the stock of money
A) is $300 billion.
B) is $400 billion.
C) is $500 billion.
D) is $4,800 billion.

Question

Quizplus · Accepted Answer

The velocity of money is defined as the rate at which money is exchanged in an economy. It is calculated as the ratio of nominal GDP to the money supply. Using the formula Velocity of Money = Nominal GDP / Money Supply, we can rearrange to find the Money Supply = Nominal GDP / Velocity of Money. Plugging in the given values, Money Supply = $1,200 billion / 4 = $300 billion.

The Velocity of Money Is 4