MV = PQ V = 2 Q = 1000 P = 100 (Quantity of Money in circulation) x (Velocity of money) = (Price) x (Real output) Velocity is equal to 2 and is constant Output is equal to 1000 and the economy is at full employment Price is equal to 100 26. Given the above, how will price level change if the quantity of money in circulation is increased from 50,000 to 100,000? a) Price Level will decrease from 100 to 50 b) Price Level will increase from 100 to 500 c) Price Level will increase from 100 to 200 d) Price Level will remain unchanged e) None of the above.

MV = PQ V = 2 Q = 1000 P = 100 (Quantity of Money in circulation) x (Velocity of money) = (Price) x (Real output) Velocity is equal to 2 and is constant Output is equal to 1000 and the economy is at full employment Price is equal to 100 26. Given the above, how will price level change if the quantity of money in circulation is increased from 50,000 to 100,000? a) Price Level will decrease from 100 to 50 b) Price Level will increase from 100 to 500 c) Price Level will increase from 100 to 200 d) Price Level will remain unchanged e) None of the above.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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