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a) Assume that money supply = 15, velocity = 5, and output = 25. Calculate the price level P. b) Assume that money supply increased

a) Assume that money supply = 15, velocity = 5, and output = 25. Calculate the price level P.

b) Assume that money supply increased by 5 units while velocity and output remained unchanged.

Calculate:

- Price level P

- Growth in money supply.

- Growth in Price level (inflation).

c) Is the change in the price level in the previous part compatible with the short run theories or the long run theories?

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