Multiple Choice
Suppose the velocity of money is 8, the amount of money in circulation is $200 billion, the index of prices is 150, and real GDP is $10 billion. According to the strict quantity theory of money, if the money supply doubled to $400 billion,
A) the velocity of money would fall to 4.
B) the index of prices would increase to 300.
C) real GDP would increase to $20 billion.
D) the velocity of money would rise to 16.
Correct Answer:
Verified
Correct Answer:
Verified
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