Suppose asset market is in equilibrium, real money demand is 1000, real output is 6000, and...

Suppose asset market is in equilibrium, real money demand is 1000, real output is 6000, and the price level is 200. What is the level of velocity in this economy? (please show work)
A) 2

B) 3

C) 6

D) 12

E) 10

Solutions

Expert Solution

Answer is 6 i.e C.

Velocity = Nominal GDP/ Nominal Money Stock. P*Y/M

Y/M_^d

6000/1000=6

so, level of velocity in the economy is 6.

Rahul Sunny answered 1 year ago

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