Suppose the money supply is €200, real output is 1,000 units, and the price per unit of output is €1. a. What is the value of velocity? b. If velocity is fixed at the value you solved for in part (a), what does the quantity theory of money suggest will happen if the money supply is

Suppose the money supply is €200, real output is 1,000 units, and the price per unit of output is €1. a. What is the value of velocity? b. If velocity is fixed at the value you solved for in part (a), what does the quantity theory of money suggest will happen if the money supply is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose the money supply is €200, real output is
1,000 units, and the price per unit of output is €1.
a. What is the value of velocity?
b. If velocity is fixed at the value you solved for in
part (a), what does the
quantity theory of money suggest will happen if
the money supply is
increased to €400?

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