The Velocity of Circulation Is Equal to

question 19

Multiple Choice

The velocity of circulation is equal to

• A) the reciprocal of the marginal propensity to consume.
• B) nominal GDP divided by the money supply.
• C) real GDP times the price level.
• D) the money supply divided by the price level.
• E) nominal GDP divided by real GDP.

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Definitions:

Wholesale Rates

Prices charged for goods in large quantities, typically lower than retail prices and offered to retailers or other businesses rather than individual consumers.

Price Taker

A market participant that accepts the prevailing market prices as they do not have enough market power to influence prices.

Close Substitutes

Products or services that can easily replace each other in the eyes of the consumer due to their similar features or functions.

Total Revenue

The total income received by a firm from its sales of goods or services, calculated by multiplying the price per unit by the number of units sold.