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According to the equation of exchange, if the money supply is $700 million, real gdp is $1,600 million, and nominal gdp is $3,500 million, then the velocity of money is equal to?

Respuesta :

The velocity of money is 5.

Given the money supply, M = $700 million

The real GDP, Q = $1600 million

The nominal GDP = $3500 million

So the price level is given by, P = Nominal GDP / Real GDP

                                                     = 3500/1600

                                                     = 2.1875

According to the Equation of Exchange,

                                              MV = PQ ,where V is the velocity of money.

So, the velocity of money ,V = PQ / M

                                                = (2.1875 x 1600) / 700

                                                = 5

Learn more about the equation of exchange at https://brainly.com/question/27428356

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