Final answer:
The velocity of money is calculated by dividing nominal GDP by the money supply. For a nominal GDP of 3500 and a money supply of 1110, the velocity is approximately 3.15, making option c the correct answer. The correct option is c. 3.15.
Step-by-step explanation:
Understanding the Velocity of Money
The question asks for the calculation of the velocity of money given a nominal GDP of 3500 and a money supply of 1110. Velocity of money is a measure of how quickly money is circulating in the economy and is calculated by dividing the nominal GDP by the money supply.
In this case, the formula for velocity (V) is V = nominal GDP / money supply, which gives us V = 3500 / 1110. Carrying out the division, we find that the velocity is approximately 3.15.
There are important implications of the velocity of money in economic analysis. For instance, if the velocity of money increases, it can signal that transactions are happening more frequently, suggesting economic growth. Conversely, a slowing velocity might indicate a stagnating economy.