Question

In drewland, the money supply equals $1,000 and velocity of money is 3. the government budget is $300, consumers spend $1500, and investors spend $500. when national output is 30, then price equals

Answer 1

We are given:

Money supply = $1,000
Velocity of money = 3, this is the amount per unit time 
Government Budget = $300
Consumers = $1500
Investors = $500
National Output = 30 

First, let us group the terms:

Input = Money Supply + Investors
Output = Government Budget + Consumers

Input = $1000 + $500 = $1500
Output = $1500 + $300 = $1800

The price should be the difference of Output - Input:

$1800 - $1500 = $300.

This should be the least price value for Drewland to break even on their budget and expenses.