# Macroeconomics

Suppose in an economy the nominal money supply is \$ 1000, the general price level is 4 and the real output is at its full employment level of \$4000.
a. what is the price level and velocity of money?
b. By assuming constant velocity of money, what would you expect to see the relationship between money supply and the price level from the quantity theory equation of money?
c. What would be the new price level if nominal money supply increases to \$1800 and if nominal money supply decreases to \$ 800?

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