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Business, 20.03.2020 11:49 abigailweeks10

Express the following relationships using the equation for the quantity theory of money. a. The money supply is given by nominal GDP divided by the velocity of money. P = MV / Y. M / P = Y / V. M = PY / V. Y = MV / P. b. The relationship of the money supply to the price level is the same as the relationship between real GDP and velocity. (Hint: Start by dividing the money supply by the price level.) M = PY / V. Y = MV / P. P = MV / Y. M / P = Y / V. c. Real GDP is given by the flow of money divided by the price level. Y = MV / P. M / P = Y / V. P = MV / Y. M = PY / V. d. The price level of an economy can be found by dividing the product of the money supply and its velocity by real GDP. M / P = Y / V. M = PY / V. P = MV / Y. Y = MV / P.

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