Question

Which of the following is not the quantity equation of money?

Select one:

a. Money Supply x Velocity = Price Level x Real GDP

b. Velocity = Nominal GDP / Money Supply

c. Nominal GDP = Money Supply x Velocity

d. Real GDP = Money Supply x Velocity

Answer #1

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1. Using the quantity equation, what happens to the price level
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real GDP does not change?
2. Using the quantity equation, what happens to the price level
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real GDP increases by 5%?

The quantity theory of money we discussed in class assumes that
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M ×V = P × Q
Where:
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• V represents the velocity of money. which is the
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Assume the money supply is $500, the velocity of money is 8, and
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b. Determine the level of nominal output. $.
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The equation of exchange ________. A) states that the quantity
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C) shows that real GDP must equal real money balances times the
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