According to the quantity equation, if velocity and real GDP are constant and the Reserve Bank increases the money supply by 5%, then the price level:Group of answer choicesis also constantdecreases by 10%increases by 5%decreases by 5%

If the real GDP increases by 4%, the Price level decreases by 1%, and velocity increases by 6%, then, which is the change in the money supply is _____percent

Key ideas→ In the long run, an increase in the quantityof money leads to an equal percentageincrease in the price level→ Nominal GDP = PY→ V = PY/M→ P = M(V/Y)→ (Inflation rate) = (Money growth rate) +(Growth rate of velocity) − (Real GDPgrowth rate)

Suppose that this year’s money supply is $500 billion, nominal GDP is $10trillion, andreal GDP is $5 trillion. (10 marks)a. What is the price level? What is the velocity of money?

If the money supply increases, while prices and velocity remain constant, real GDP will:

Suppose an economy’s money supply grows by 5% and its real GDP grows at 1%. Assuming the velocity of money remains constant, what is the inflation rate?