Suppose the Public Holds $200 Billion in M2 and the Velocity

question 53

Multiple Choice

Suppose the public holds $200 billion in M2 and the velocity of the M2 money supply is 5. What is the value of nominal GDP?

• A) $500.
• B) $1,000.
• C) $1,500.
• D) That information cannot be determined.

---

Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overhead incurred to convert raw materials into finished goods.

Curing Department

A specific department in a manufacturing process, especially in industries like rubber or tobacco, responsible for the curing phase, which involves controlled drying or chemical treatments.

FIFO Method

An inventory valuation method that assumes goods are sold in the order they are acquired, with the oldest items sold first.

Conversion Costs

Costs incurred to convert raw materials into finished products, including labor and overhead but excluding material costs.