CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

If the existing money stock is $100 billion, the nominal GDP is $400 billion, and the average price level is $20, then according to the quantity theory of money, the velocity of money is ______.
A. 4
B. 5
C. 80
Explanation: Since PY = GDP = MV, V = GDP/M:
Velocity = 400 / 100 = 4.
The price level is not needed here.

User Contributed Comments 5

User Comment
rsanfo nominal GDP = P * Y
GouldenOne mv=py...no?
gill15 Goulden---thought it was that as well....GDP = PY....use that....
mdlofmn gdp = py = mv
CJPerugini Y is real GDP. Nominal GDP = PY
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