The Velocity of Circulation Is

question 346

Multiple Choice

The velocity of circulation is

• A) equal to the quantity of money multiplied by nominal GDP.
• B) average quantity of money that exists during a year.
• C) the average number of times a dollar bill is used in a year to buy the goods and services in GDP.
• D) equal to the price level multiplied by real GDP.

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Definitions:

Market For Butter

The supply and demand dynamics concerning the sale and purchase of butter.

Surplus

A situation in which the quantity of a good or service supplied exceeds the quantity demanded at the current price.

Binding Price Floor

A minimum price set by the government that is above the equilibrium price, causing a surplus of the good.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a balanced market.