Solution:-
A) PY=MV
2 * 10,000 = M * 5
20,000 = M * 5
M = 20,000 / 5
M = 4,000 (Nominal Money Supply)
Real money supply = Nominal money supply / Price level
= 4,000 / 2
= 2,000
B) When nominal money supply = 5,000
5,000 x 5 = P x 10,000
25,000 = 10,000P
P = 25,000/10,000 = 2.5
B) When nominal money supply = 6,000
6,000 x 5 = P x 10,000
30,000 = 10,000P
P =30,000/10,000 = 3
Assume that the quantity theory of money holds and that velocity is constant at 5.0. Output...
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