Suppose that the money supply and the nominal GDP for a hypothetical economy are $96 billion and

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Suppose that the money supply and the nominal GDP for a hypothetical economy are $96 billion and $336 billion, respectively.

What is the velocity of money? How will households and businesses react if the central bank reduces the money supply by $20 billion? By how much will nominal GDP have to fall to restore equilibrium, according to the monetarist perspective? LO2

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