Economics (McConnell) AP Edition, 19th Edition

Chapter 36: Current Issues in Macro Theory and Policy

Web-based Questions

1
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 M1 money supply data (seasonally adjusted) at the Fed's Web site, www.federalreserve.gov, by selecting, in sequence, "Economic Research and Data," "Statistical Releases and Historical Data," and "Money Stock Measures—H6," then "Historical Data."
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