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Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch
Edition 1ISBN: 978-0077332648Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch
Edition 1ISBN: 978-0077332648 Exercise 3
Express the following relationships using the equation for the quantity theory of money.
a. The money supply is given by nominal GDP divided by the velocity of money.
b. The relationship of the money supply to the price level is the same as the relationship between real GDP and velocity. ( Hint: Start by dividing the money supply by the price level.) c. Real GDP is given by the flow of money divided by the price level.
d. The price level of an economy can be found by dividing the product of the money supply and its velocity by real GDP.
a. The money supply is given by nominal GDP divided by the velocity of money.
b. The relationship of the money supply to the price level is the same as the relationship between real GDP and velocity. ( Hint: Start by dividing the money supply by the price level.) c. Real GDP is given by the flow of money divided by the price level.
d. The price level of an economy can be found by dividing the product of the money supply and its velocity by real GDP.
Explanation
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Quantity theory of money:
The quantity ...
Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch
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