If the velocity of money is 2 and nominal GDP is $200 trillion, then money supply is _____
A) $1 trillion.
B) $10 trillion.
C) $100 trillion.
D) $200 trillion.
E) $500 trillion.

Question

Quizplus · Accepted Answer

The velocity of money is calculated as the ratio of nominal GDP to the money supply (VM = GDP / MS). In this case, we are given that the velocity of money is 2 and nominal GDP is $200 trillion. Therefore, we can solve for the money supply as MS = GDP / VM, which is equal to $200 trillion / 2 = $100 trillion. Therefore, the answer is (C) $100 trillion.

If the Velocity of Money Is 2 and Nominal GDP