26. The velocity of money is: a. nominal GDP divided by the nominal quantity of money b. nominal GDP divided by the real quantity of money c. real GDP divided by the real quantity of money d. real GD...
26. The velocity of money is:
a. nominal GDP divided by the nominal quantity of money
b. nominal GDP divided by the real quantity of money
c. real GDP divided by the real quantity of money
d. real GDP divided by the nominal quantity of money
Homework Answers
Option A.
- The velocity of money refers to the rate at which money changes hands and circulates in the whole economy in a given period of time.
- It is given by the nominal GDP divided by the nominal quantity of money. It is measured in nominal terms because, the rate at which money is spent by people in the economy depends on the price level at any point of time.
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