Assume that M is $300 billion and V is 10. What is the level of nominal GDP according to the monetarist equation? If V rises by 10%, then according to the monetarist equation, what will be the new level of nominal GDP?
What will be an ideal response?
10 ? $300 billion = $3000 billion GDP. If V rises by 10% to 11%, then the new level of GDP should rise by 10% to $3300 billion or 11 ? $300 billion = $3300 billion.
Economics
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