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MONETARY THEORY
Use the following information to fill in blanks 1 - 5.
In year 1, the money supply (M) is equal to $450, the velocity of money (V) is 6, and the
price level is 1.0. In year 2, the money supply is increased to $495 and velocity remains
unchanged.
1.
Real GDP in year 1 is equal to $_
2.
Nominal GDP in year 1 is equal to $
3.
If the economy grew at a rate of 5%, real GDP in year 2 is equal to $
4.
What happened to the price level from year 1 to year 2?
5.
The rate of inflation between year 1 and year 2 is equal to
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