If the Velocity of Money Is About 1

question 23

Multiple Choice

If the velocity of money is about 1.8 and nominal GDP is $14.4 trillion, what is the money supply?

• A)$1.8 trillion
• B)$8.0 trillion
• C)$14.4 trillion
• D)we cannot compute the money supply from the data given

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Definitions:

Market Rate

The current price or interest rate at which a good, service, or financial asset can be bought or sold in a competitive market.

Journal Entry

An accounting transaction entered into a ledger that denotes the financial activities of a company.

Statement of Cash Flows

A summary statement which tracks all cash inflows to a company from its regular business operations and funds received from investments, plus all cash outflows for paying business and investment costs within a certain period.

Investing Activities

Transactions involving the purchase or sale of long-term assets and investments which are not related to the entity's primary business operations.