Calculate the ratios of GDP to Money supply and interpret the results.
If anyone of you know how to do this, please help me! I will be so thankful
The table below presents the calculation of money velocity "V" for three countries: Poland in 2006, US in 2009 and Colombia in 2010. The Gross Domestic Product of each country is provided an then the value of monetary aggregates at the end of the corresponding year (note: each country displays a slightly different method of communicating monetary aggregates, so only M1 is uniformly available in all the three cases). Explain the relationshio between GDP and the supply of money. why is the supply of money systematically lower than GDP? Why is the velocity of money different across countries?
Poland,2006,millions of polish zlotys US,2009,billions of US$ Colombia,2010,millions of US$ GDP 1 060 031,0 14 119,0 283 109,0 M0[end of the year] 86 825,7 n.a. 29 769,5 M1[end of the year] 275 830,9 1 693,6 62 090,6 M2[end of the year] 481 210,5 8 530,9 n.a. M3[end of the year] 495 309,5 n.a. 220 063,9 Velocity of M0 12,21 n.a. 9,51 Velocity of M1 3,84 8,34 4,56 Velocity of M2 2,20 1,66 n.a. Velocity of M3 2,14 n.a. 1,29
Ok, and what about these questions : Explain the relationshio between GDP and the supply of money. Why is the supply of money systematically lower than GDP? Why is the velocity of money different across countries? How can I answer them? I know that I already seem like witless to you but I really have no idea about it..