The Velocity of Circulation Is Equal to

question 44

Multiple Choice

The velocity of circulation is equal to

• A)the quantity of money divided by nominal GDP.
• B)the quantity of money divided by the price level and then multiplied by real GDP.
• C)the price level multiplied by the quantity of money.
• D)the price level divided by real GDP.
• E)nominal GDP divided by the quantity of money.

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Definitions:

Allowance for Doubtful Accounts

An account that offsets assets, designed to predict the amount of a company’s accounts receivable that is likely to be uncollectible.

Normal Balance

The side (debit or credit) of an account that is positive or increasing in nature, depending on the type of account.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.

Uncollectibles

Financial term referring to debts or receivables that are deemed unlikely to be collected and thus written off.