The equation of exchange is given by M X V = PX Q, where M is the money supply, V is the velocity of money, P is the economy's price level, and Q is real GDP. Suppose the following diagram shows the current aggregate demand (AD) and aggregate supply ( AS) curves in a hypothetical economy. 18 AS O 15 AD 12 AS 9 PRICE LEVEL 6 AD 3 0 0 3 6 6 12 15 18 REAL GDP (Trillions of dollars)Nominal GDP in this economy is $ trillion. If the velocity of money is 2, the money supply in this economy is Shift the AD curve on the previous diagram to show the effects of a decrease in the money supply. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. Based on the new price level, the new money supply must be $ trillion in the long run if the velocity of money remains at 2. Because , the percentage decrease in the price level is the percentage decrease in the money supply. This illustrates the