If the Velocity of Money Is 2 and Nominal GDP

question 87

Multiple Choice

If the velocity of money is 2 and nominal GDP is $200 trillion, then money supply is _____

• A) $1 trillion.
• B) $10 trillion.
• C) $100 trillion.
• D) $200 trillion.
• E) $500 trillion.

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Definitions:

Bond Interest Expense

The cost incurred by an issuer of bonds due to interest payments made to bondholders, typically recognized as an expense in the income statement.

Effective Yield

A measure of the actual rate of return earned on a bond or fixed-income investment, taking into account the effect of compounding interest.

Present Value Factors

Mathematical factors used to calculate the present value of a future amount of money or stream of cash flows given a specified rate of return.

Yield 10%

Represents the annual return on an investment, expressed as a percentage of the investment's cost. Here, the investment is expected to return 10% annually.