Final answer:
The velocity of money is calculated by dividing the GDP by the money supply. For a GDP of 2987 and a money supply of 664.7, the velocity is approximately 4.5. The correct option is C. 4.5.
Step-by-step explanation:
To calculate the velocity of money, you divide the nominal GDP by the money supply. Using the provided figures, if GDP is 2987 and the money supply is 664.7, the velocity is calculated as 2987 / 664.7, resulting in approximately 4.5.
The velocity of money is a measure of how quickly money circulates in the economy. The formula for velocity is Velocity = GDP / Money Supply. In this case, the nominal GDP is 2987, and the money supply is 664.7.
Plugging these values into the formula, you get Velocity = 2987 / 664.7. Performing the calculation gives you approximately 4.49, which can be rounded to 4.5. Therefore, the velocity of money in this scenario is 4.5, indicating that, on average, each unit of currency is used 4.5 times in the given period.