8. Within the classical form of the quantity theory, the demand for money is given by Md = kPY %3D Suppose income (Y) is given at 400 units, and the money supply (M) is fixed at 200 units. Suppose k drops from its initial value of 0.5 to 0.25. What is the new price level after the change in k? Explain the process that leads to the change in the aggregate price level.

8. Within the classical form of the quantity theory, the demand for money is given by Md = kPY %3D Suppose income (Y) is given at 400 units, and the money supply (M) is fixed at 200 units. Suppose k drops from its initial value of 0.5 to 0.25. What is the new price level after the change in k? Explain the process that leads to the change in the aggregate price level.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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