If an Economy Produces 1,000 Units of Output When the Price

question 4

Multiple Choice

If an economy produces 1,000 units of output when the price level is $5 and the money supply is $1,000, what is the velocity of money?

• A) 5
• B) 200
• C) 50
• D) 2

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Definitions:

Trade or Business

An activity engaged in regularly and continuously for the purpose of earning income or profit.

Mortgage

A loan secured by real property, typically used to purchase the property itself, where the borrower agrees to repay the lender over a period of time.

Gain/Loss

The financial result from the sale of assets or investments, measured as the difference between the selling price and the purchase price.

Purchased

Acquired by paying money or its equivalent; involves obtaining ownership of a good or service in exchange for monetary value.