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If M = 6,000, P = 2, and Y = 12,000, what is velocity?

a. 1/4

b. 4

c. 1

d. 2

User Te Ko
by
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1 Answer

6 votes

Answer:

Velocity of money = 4

Step-by-step explanation:

Given:

Money supply M = 6,000

Price level P = 2

Real GDP Y = 12,000

Find:

Velocity of money

Computation:

Velocity of money = [Price level x Real GDP] / Money supply

Velocity of money = [P x Y] / M

Velocity of money = [12,000 x 2] / 6,000

Velocity of money = [24,000] / 6,000

Velocity of money = 24 / 6

Velocity of money = 4

User Feng Zhao
by
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