Question

if the amount of money in circulation is $140 billion and the nominal gdp of the economy is $840 billion, then which of the following is true? multiple choice the average price per final good sold is $6. the circulation period of money must be six months. the velocity of money is 6. the velocity of money is 2. the money multiplier must be 2.

Answer 1

Using the formula Velocity = nominal GDP / money supply, and given the nominal GDP of $840 billion and money supply of $140 billion, the velocity of money in this scenario is 6.

Step-by-step explanation:

The question relates to the concept of the velocity of money, which is an economic term that represents the frequency with which the average unit of currency is used to purchase newly produced goods and services within a given time period. To find the velocity of money, we use the equation Velocity = nominal GDP / money supply. Given that the nominal GDP is $840 billion and the money supply is $140 billion, the velocity of money would be $840 billion / $140 billion = 6. Therefore, the correct statement is: 'the velocity of money is 6.'