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Consider the Equation of Exchange of MV = PY, Where

Question 98

Multiple Choice

Consider the equation of exchange of MV = PY, where M is the money, V is the velocity of circulation, P is the price level and Y is the real GDP; and select the false statement from the following statements:


A) If velocity decreases, demand for money decreases.
B) If V and Y are constant, then doubling M doubles P.
C) If M is doubled, M/P will be unaffected.
D) The neutrality is a long-run outcome.

Correct Answer:

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