Question

Define velocity of money and discuss the major determinants of velocity. 2. Assume GDP is currently...

Define velocity of money and discuss the major determinants of velocity.

2. Assume GDP is currently $10,850 billion per year and the quantity of money is $833 billion. What is the velocity of money? The nation collectively holds enough money to finance how many days worth of GDP expenditure?

3. If bank A borrows $10 million from bank B, what happens to the reserves in bank A? In the banking system?

4. If bank A borrows $10 million from the Fed, what happens to reserves in bank A?. In the banking system?

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