The Velocity of Money Is 3

question 195

Multiple Choice

The velocity of money is 3. If nominal GDP is $1,500 billion then the stock of money is

• A) $300 billion.
• B) $500 billion.
• C) $4,500 billion.
• D) $7,500 billion.

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Definitions:

Supply of Loanable Funds

The total amount of funds available for borrowing in the economy, determined by savings and influenced by interest rates.

Perfectly Elastic

Describes a situation in demand or supply where quantity changes by an infinite amount in response to any change in price.

Economic Profits

The difference between total revenues and total costs, including both explicit and implicit costs, representing the surplus generated from business operations beyond the normal returns.

Hired Managers

Individuals employed by the owners of a firm to run the day-to-day operations and make business decisions.