Problem 7.2: Money Growth, Velocity, and Ination. (15 points) (a) Suppose that Mi 2 1000, .Pg 2 2, Y; = 5000. Find the velocity of money in this economy. (b) Suppose that, in the example above, the government doubles the money supply. Calculate the effect of this intervention on the price level and velocity, assuming that output and velocity are constant. (c) Consider an economy in which the money supply grows at 5% and output grows at 1%. Calculate the rate of ination, assuming a constant velocity. What happens if the money supply growth doubles to 10%