According to the Equation of Exchange,if Real GDP Is $2

question 6

Multiple Choice

According to the equation of exchange,if real GDP is $2 trillion and the money supply is $0.5 trillion,the velocity of money:

• A)must be 4.
• B)must be 1/4.
• C)must be 4 trillion.
• D)must be 1/4 trillion.
• E)cannot be determined unless we know the price level.

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Definitions:

Stock Warrants

Financial instruments that give the holder the right to purchase a company's stock at a specific price before a certain date.

Nonmonetary Exchange

A transaction in which businesses or individuals trade goods or services without the use of money.

Common Stock

A form of corporate equity ownership, representing a claim on a portion of a company's profits and a right to vote on management issues.

Stock Split

An action a company takes to divide its existing stock into multiple shares to boost the liquidity of the shares.