Question

If nominal GDP is $900 billion and, on average, each dollar is spent six times in the economy over a year, then the quantity of money demanded for transactions purposes will be Multiple Choice 750 150 3,600 450 900

Answer 1

Answer:

Option B (150) is the correct answer.

Explanation:

Given:

Nominal GDP,

= $900

Money velocity,

= 6

As we know,

⇒ $Nominal \ GDP=Quantity \ of \ demanded \ money\times Money \ velocity$

By putting the vales, we get

⇒                    $900=Quantity\times 6$  

⇒           $Quantity=\frac{900}{6}$

⇒                           $=150$