If the velocity of money is 4 and nominal GDP is $2,000, then money supply is _____
A) $1.
B) $10.
C) $100.
D) $500.
E) $1,000.

Question

Quizplus · Accepted Answer

The equation of the velocity of money is: MV = PQ (where M is the money supply, V is the velocity of money, P is the price level, and Q is the quantity of goods and services produced).

Rearranging this equation, we get:
M = PQ/V

Given that V = 4 and nominal GDP (PQ) is $2,000, we can solve for M:
M = PQ/V = $2,000/4 = $500.

Therefore, the answer is D.

If the Velocity of Money Is 4 and Nominal GDP