If the real GDP is equal to $8 trillion, the stock of money is equal to $2 trillion, and the velocity of money is equal to 5, the price level would be equal to

Question

Quizplus · Accepted Answer

The equation of exchange is MV = PY, where M is the money supply, V is the velocity of money, P is the price level, and Y is the real GDP. Plugging in the values: 2 trillion * 5 = P * 8 trillion, solving for P gives P = 1.25.

If the Real GDP Is Equal to $8 Trillion, the Stock