Question on: JAMB Economics - 2023
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The "velocity" of money is
A
The real money supply divided by the real GDP
B
The money supply multiplied by the price level
C
The money supply divided by the price level
D
The ratio of real GDP to the real money supply
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Correct Option: D
The "velocity" of money is the ratio of real GDP to the real money supply. The formula for velocity is:
\[ \text{Velocity} = \frac{\text{Nominal GDP}}{\text{Money Supply}} \]
It is often expressed as the number of times a unit of money changes hands in a given period, indicating how quickly money is circulating in the economy.
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