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    Question

    Suppose nominal GDP equals 1,000 units and money supply equals 250 units. Based on the quantity theory of money, the velocity of money equals.

    A 40 Correct Answer Incorrect Answer
    B 4 Correct Answer Incorrect Answer
    C 2,50,000 Correct Answer Incorrect Answer
    D 500 Correct Answer Incorrect Answer

    Solution

    MV= PY. V=PY/M = 1000/250 = 4      

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