91Ó°ÊÓ

Money supply: Monetary resource is that the total stock of cash within the economy at some extent of your time.

GDP (Gross Domestic Product): GDP of a rustic is that the value of all finished (final) goods and services produced in an economy during a specific year. It represents the economic well-being of a rustic because it is that the aggregate income of that economy.

Velocity of cash: It's the pace of circulation of money within the economy.

The velocity of cash is pace of circulation of cash within the economy. The formula for calculating velocity of cash is given below.$\text{Velocity of money}=\frac{\text{Nominal GDP}}{\text{Money supply}}$$⇒v=\frac{Y}{M^s}$

$\text{Money supply,}{\mathrm{M}}^{\mathrm{S}}=\$400$

$\text{Nominal GDP}=\$1600$

$\text{With given money supply and nominal GDP, we calculate the velocity of money as follows:}$$\text{Velocity of money}=\frac{\text{Nominal GDP}}{\text{Money supply}}$$⇒v=\frac{Y}{M^s}$

$⇒v=\frac{1600}{400}$

$⇒v=4$

$\text{Hence, the velocity of money,}v\text{is}4\text{.}$