If M = 6,000,P = 3,and Y = 3,000,what is velocity?
A)6
B)1.5
C)0.67
D)0.167

Question

Quizplus · Accepted Answer

Velocity (V) is calculated by dividing the product of money supply (M) and the velocity of money (V) by the price level (P).

V = (M*V)/P

We are given M = 6,000, P = 3, and Y = 3,000. We need to solve for V.

V = (M*V)/P 
V = (6,000*V)/3 
3V = 6,000 
V = 2,000

Therefore, the velocity is 2,000.

We can also check our answer by using the equation of quantity theory of money:

M*V = P*Y 
6,000*V = 3*3,000 
6,000*V = 9,000 
V = 1.5

Hence, the answer is B (1.5), which is the velocity.

If M = 6,000,P = 3,and Y = 3,000,what Is