If the velocity of money is 3, real GDP is 200 and the money supply is 120, then average prices are 5.

Name: If the velocity of money is 3, real GDP is 200 and the money supply is 120, then average prices are 5.
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Quizplus · Accepted Answer

The average price level (P) can be calculated using the equation of exchange: MV = PY. Here, M = 120, V = 3, and Y = 200. Solving for P gives P = (MV)/Y = (120*3)/200 = 1.8, not 5.

If the Velocity of Money Is 3, Real GDP Is