Posted by atan on Monday, November 16, 2009 at 12:14am.
Suppose that velocity is constant. The economy's output of goods and services rises by 5% each year. What will happen to nominal GDP and the price level next year if the Fed keeps the money supply constant? (Hintput the variables into the formula)
Help!

Macroeconomics  economyst, Monday, November 16, 2009 at 1:30pm
The formula is MV=PQ, where PQ is the price level time output of goods and services. PQ is nominal GNP. So if M is fixed and V is fixed and Q is 5% higher, what must happen to P.
That is MV = PQ = (zP)*)*(1.05*Q)  solve for z

Macroeconomics  Anonymous, Wednesday, November 26, 2014 at 9:21am
,gfyuj
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