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18 March, 14:39

Suppose that M = 300, P = 100, and Y = 6. Then the velocity of circulation equals Select one: a. 2.00. b. 3.00. c. 50 d. 0.50. e. 0.02.

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  1. 18 March, 18:16
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    a. 2.00.

    Explanation:

    The formula and the computation of the velocity of circulation are shown below:

    According to the quantity money theory

    M = Total money

    V = Velocity

    P = Price level

    Y = Volume of goods and services

    As we know that

    Total amount of money in the economy * velocity = Price level * volume of goods and services

    300 * velocity = 100 * 6

    300 * velocity = 600

    So, the velocity is

    = 600 : 300

    = 2

    Hence, the first option is correct
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Home » Business » Suppose that M = 300, P = 100, and Y = 6. Then the velocity of circulation equals Select one: a. 2.00. b. 3.00. c. 50 d. 0.50. e. 0.02.
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