If real output is $10 billion, the price level is 3, and velocity is 6, what is the stock of money?
A) $1.8 billion
B) $5 billion
C) $19 billion
D) $180 billion

Question

Quizplus · Accepted Answer

The equation for the quantity equation is MV=PY, where M is the stock of money, V is velocity, P is the price level, and Y is real output. Plugging in the given values, we get M = (PY)/V = (3*10 billion)/6 = 5 billion. Therefore, the answer is B.

If Real Output Is $10 Billion, the Price Level Is