According to the Quantity Equation, If Velocity and Real GDP

question 37

Multiple Choice

According to the quantity equation, if velocity and real GDP are constant, and the Federal Reserve increases the money supply by 5 percent, then the price level:

• A)decreases by 5 percent.
• B)decreases by more than 5 percent.
• C)increases by more than 5 percent.
• D)increases by 5 percent.

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