From the Equation of Exchange, If Both Nominal Income and the Quantity

question 2

Multiple Choice

From the equation of exchange, if both nominal income and the quantity of money (M) double, the price level (P) decreases by 50 percent and velocity (V) remains constant, then real output (Y) ________.

• A) also doubles
• B) triples
• C) quadruples
• D) decreases by 50 percent
• E) none of the above

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A limitation on the maximum output or processing ability of a resource, system, or organization.

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