In This Problem We Try to Establish a Link Between

Essay

In this problem we try to establish a link between the quantity equation, MdV = PY, and the money demand-money supply diagram (Md is the quantity of money demanded). In a graph having the price level P on the vertical axis and the quantity of money M on the horizontal axis and considering V and Y independent on the price level or the quantity of money demanded, draw the Md - P curve that is implied by the quantity equation.