If nominal GDP is $1344 billion, and velocity of money is 6, how much is the money supply? If the GDP price index is 160, what is real GDP here?
What will be an ideal response?
$1344 billion/6 = $224 billion = PQ, where Q is real GDP. If P = 1.60, then real GDP = $1344/1.60 = $840 billion.
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