Which of the following is the most accurate definition of the velocity of money? The velocity of money is the:
A)GDP of a country divided by its money supply.
B)GDP of a country divided by its price level.
C)money supply of a country divided by its price level.
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答案 A
Velocity is the average number of times per year each dollar is used to buy goods and services (velocity = nominal GDP / money). Therefore, the money supply multiplied by velocity must equal nominal GDP. The equation of exchange must hold with velocity defined in this way. Letting money supply = M, velocity = V, price = P, and real output = Y, the equation of exchange may be symbolically expressed as: MV = PY.
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