If an economy produces 2,000 units of output when the price level is $2 and the money supply is $1,000, what is the velocity of money?
A) 4
B) 500
C) 1
D) 2

Name: If an economy produces 2,000 units of output when the price level is $2 and the money supply is $1,000, what is the velocity of money? A) 4 B) 500 C) 1 D) 2
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Question

Quizplus · Accepted Answer

The velocity of money is calculated as the total transactions (price level * output) divided by the money supply. Here, it's (2 * 2000) / 1000 = 4.

If an Economy Produces 2,000 Units of Output When the Price