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4. Use the equation, MV PY: Suppose the money supply is $10 Trillion and suppose nominal GDP is $25 trillion. What does that mean the
4. Use the equation, MV PY: Suppose the money supply is $10 Trillion and suppose nominal GDP is $25 trillion. What does that mean the velocity of money is today?
5. Now use the "growth rate version" of MV PY. Assuming velocity does not change, by what percent would the price level rise if A) the Fed increased the money supply by 10 percent and real GDP (Y) didn't change? B) What if money supply increased 10%, but real GDP rose 4%what would inflation be? C) What if the money supply increased 4% and real GDP rose 3%?
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