If an Economy Has a Velocity of Circulation of 3

question 253

Multiple Choice

If an economy has a velocity of circulation of 3, then

• A) the quantity of money is 3 times real GDP.
• B) in a year the average dollar is exchanged 3 times to purchase goods and services in GDP.
• C) nominal GDP is 1/3 the size of the quantity of money.
• D) the quantity of money is $3 for every dollar of GDP.

---

Definitions:

Maintenance Supplies

Items and materials used in the routine care and upkeep of machinery, equipment, and facilities.

Factory Overhead

All the indirect costs associated with running a manufacturing facility, such as utilities, maintenance, and salaried personnel, that cannot be directly traced to specific products.

Direct Materials

Raw materials that are directly used in the manufacturing process of a product and can be easily traced to it.

Factory Overhead

All indirect costs related to manufacturing, such as utilities, maintenance, and salaries of indirect labor, not directly tied to production.