Monetarists believed for a period of time that the velocity ofmoney was stable within a

Chapter 6, Problem 13

(choose chapter or problem)

Monetarists believed for a period of time that the velocity ofmoney was stable within a country. However, with financial innovation,the velocity began shifting around erratically after1980. As would be expected, the velocity of money is differentacross countries depending upon the sophistication of their financialsystemsvelocity of money tends to be higher in countrieswith developed financial systems. The accompanyingtable provides money supply and GDP information in 2005 forsix countries. a. Calculate the velocity of money for each of the countries.The accompanying table shows GDP per capita for each ofthese countries in 2005 in U.S. dollarsb.Rank the countries in descending order of per capita incomeand velocity of money. Do wealthy countries or poorcountries tend to turn over their money more times peryear? Would you expect that wealthy countries have moresophisticated financial systems?