Suppose that initially the money supply is $1 trillion, the price level equals 3, the real GDP is $5 trillion inbase-year dollars, and income.

Hello, please explain.

Suppose that initially the money supply is ​$1 ​trillion, the price level equals 3​, the real GDP is ​$5 trillion in​ base-year dollars, and income velocity of money is 15. Then the money supply increases by ​$100 ​billion, while real GDP and income velocity of money remain unchanged.

a.    According to the quantity theory of money and prices, calculate the new price level after the increase in money​ supply:

Thank you!

Hi there! Click one of our representatives below and we will get back to you as soon as possible.

Chat with us on WhatsApp