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JAMB Economics 2010 Question 32

Question 32

Money and Inflation

The velocity of money is represented as

  1. A.money supply/real GDP
  2. B.nominal GDP/money supply
  3. C.real GDP/money supply
  4. D.real GDP/nominal GDP
Show the answer and explanation

Answer: B (nominal GDP/money supply)

Explanation

Velocity is how many times each naira is spent in a year: total spending (nominal GDP) divided by money supply.