If the GDP price index is 150, real GDP is $10 trillion, and the quantity of money is $5 trillion, what is the velocity of circulation? The velocity of circulation is ____Thankyou!! Starting with the velocity ofcirculation equation,...if we multiply both sides byM, we get the equation ofexchange, which states thatthe quantity of money, M.multiplied by the velocity ofcirculation, V, equals theprice level P, multiplied byreal GDP, Y.With a quantity of money of$2 trillion, and a velocity ofcirculation of 5 then...And with the price level at1.25 and real GDP at$8 trillion, then...So,ResetV= (P x Y) = MMxV=PxYMx V = $2 trillion * 5= $10 trillionPX Y = 1.25 * $8 trillion= $10 trillionMxV=PxY= $10 trillionM = $2 trillionV = 5P = 1.25Y = $8 trillionPX Y = $10 trillion

Here, given information is: GDP price index: 150 Real GDP: $10 trillion Quantity of money: $5…

Answered: If the GDP price index is 150, real GDP…

If the GDP price index is 150, real GDP is $10 trillion, and the quantity of money is $5 trillion, what is the velocity of circulation? The velocity of circulation is ____

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

If the GDP price index is 150, real GDP is $10 trillion, and the quantity of money is $5 trillion, what is the velocity of circulation? The velocity of circulation is ____

Thank

you!!

Starting with the velocity of
circulation equation,...
if we multiply both sides by
M, we get the equation of
exchange, which states that
the quantity of money, M.
multiplied by the velocity of
circulation, V, equals the
price level P, multiplied by
real GDP, Y.
With a quantity of money of
$2 trillion, and a velocity of
circulation of 5 then...
And with the price level at
1.25 and real GDP at
$8 trillion, then...
So,
Reset
V= (P x Y) = M
MxV=PxY
Mx V = $2 trillion * 5
= $10 trillion
PX Y = 1.25 * $8 trillion
= $10 trillion
MxV=PxY
= $10 trillion
M = $2 trillion
V = 5
P = 1.25
Y = $8 trillion
PX Y = $10 trillion

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