Question

Consider the following data: The money supply is \(1 trillion, the price level equals 2, and real GDP is \)5 trillion in base-year dollars. What is the income velocity of money?

Short answer

income velocity of money is$\$2$trillion

Step-by-step solution

introduction

It is the times one unit of money can be utilized to enjoy the labour and products bought and spent per unit throughout some undefined time frame.

explanation 

We know,

The money supply is$\$1$trillion, the price level equals $2$, and real GDP is$\%5$trillion in base-year dollars

Using MV=PY,

it would prompt an increment of the money supply by $\$2$trillion.