Principles of Macroeconomics 7th Edition

Published by South-Western College
ISBN 10: 1-28516-591-8
ISBN 13: 978-1-28516-591-2

Chapter 17 - Money Growth and Inflation - Quick Check Multiple Choice - Page 367: 2

Answer

d. the price level is 2, and velocity is 4

Work Step by Step

Price Level = Nominal GDP/Real GDP = \$400/\$200 = 2 Money Supply, M = \$100 Nominal GDP, P x Y = 2 x \$200 = \$400 Using the Quantity Equation, M x V = P x Y Velocity, V = (P x Y) / M = \$400/ \$100 = 4
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