Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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See the attached while helping me determine?

Transcribed Image Text:If nominal GDP is $900 billion and, on average, each dollar is spent three times in the economy over a year, then the quantity of money demanded for transactions purposes will be
Multiple Choice
450
900
2,700
600
300
Expert Solution

Step 1
Velocity of money = GDP/Money Supply
3 = 900/Money Supply
Money Supply = 900/3 = 300
OPTION E
Velocity of money is the rate at which money is exchanged in the economy.
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