Problem:
Assume that a country estimates its M1 money supply at $20 million. A broader measure of the money supply, M2, is $50 million. The country's gross domestic product is $100 million. Production or real output for the country is 500,000 units or products.
Required:
Question 1: Determine the velocity of money based on the M1 money supply.
Question 2: Determine the velocity of money based on the M2 money supply.
Question 3: Determine the average price for the real output.
Note: Explain all calculation and formulas.