If nominal GDP is $5,000 billion and the velocity of the M2 money supply is 5, what is the amount of the public's holding in the form of M2?
A) $500 billion
B) $1,000 billion
C) $1,500 billion
D) $2,000 billion

Question

Quizplus · Accepted Answer

The formula for the velocity of money is V = GDP / M2. Rearranging gives M2 = GDP / V. Substituting the given values, M2 = $5,000 billion / 5 = $1,000 billion.

If Nominal GDP Is $5,000 Billion and the Velocity of the M2