The quantity theory of money: What is the key endogenous variable in the quantity theory? Explain the effect on this key variable of the following changes: (a) The money supply is doubled. (b) The velocity of money increases by 10%. (c) Real GDP rises by 2%. (d) The money supply increases by 3% while real GDP rises by 3% at the same time.
The quantity theory of money: What is the key endogenous variable in the quantity theory? Explain the effect on this key variable of the following changes: (a) The money supply is doubled. (b) The velocity of money increases by 10%. (c) Real GDP rises by 2%. (d) The money supply increases by 3% while real GDP rises by 3% at the same time.
Chapter13: Monetary Policy
Section: Chapter Questions
Problem 6E
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The quantity theory of money: What is the key endogenous variable in the quantity theory? Explain the effect on this key variable of the following changes:
(a) The money supply is doubled.
(b) The velocity of money increases by 10%.
(c) Real GDP rises by 2%.
(d) The money supply increases by 3% while real GDP rises by 3% at the same time.
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