Question
Suppose that initially the money supply is $1 trillion, the price level equals 3, the real GDP is $5 trillion in base-year dollars, and income
Suppose that initially the money supply is $1 trillion, the price level equals 3, the real GDP is $5 trillion in base-year dollars, and income velocity of money is 15. Then the money supply increases by $100 billion, while real GDP and income velocity of money remain unchanged.
Required
According to the quantity theory of money and prices, calculate the new price level after the increase in money supply_______.
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Financial and Managerial Accounting
Authors: Horngren, Harrison, Oliver
3rd Edition
978-0132497992, 132913771, 132497972, 132497999, 9780132913775, 978-0132497978
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