If real money demand increases 5% and real money supply increases 10%,by about how much does the price level change?

Name: If real money demand increases 5% and real money supply increases 10%,by about how much does the price level change?
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Question

Quizplus · Accepted Answer

The price level is inversely related to the real money supply. If the real money supply increases by 10% and real money demand increases by 5%, the excess supply of money will lead to a 5% increase in the price level to restore equilibrium.

If Real Money Demand Increases 5% and Real Money Supply