Macroeconomics + Economy 2009 Update 18th Edition by Campbell McConnell, Sean Masaki Flynn,Stanley Brue

Exercise 15

THE EQUATION OF EXCHANGE-WHAT IS THE CURRENT VELOCITY OF MONEY In the equation of exchange, MV = PQ , the velocity of money, V , is found by dividing nominal GDP (= PQ ) by M , the money supply. Calculate the velocity of money for the past 4 years. How stable was V during that period Is V increasing or decreasing Get current-dollar GDP data from the "Gross Domestic Product" section at the Bureau of Economic Analysis Web site, www.bea.gov/. Find M 1 money supply data (seasonally adjusted) at the Fed's Web site, www.federalreserve.gov/ , by selecting, in sequence, Economic Research and Data, Statistics: Releases and Historical Data, and Money Stock Measures-Historical Data.