Answer to Question #163401 in Macroeconomics for Tazrian

Question

Jazzieshizzle is a small economy with the nominal GDP of $440, real GDP of $80, and the money supply of $55. Calculate the price level and the velocity of money. 

Answer 1

Velocity of money $\frac{nominal GDP}{money supply}=\frac{440}{55}=8$

Price level $=$ money supply $\times$ velocity of money $\div$ real GDP $=\frac{55\times 8}{80}=5.5$