According to the equation of exchange,what would result from a change in the money supply of 6.5 percent,holding velocity constant?

Question

Quizplus · Accepted Answer

According to the equation of exchange, MV=PQ, where M is the money supply, V is velocity, P is the price level, and Q is real GDP. Since velocity is held constant, a 6.5 percent increase in M would lead to a 6.5 percent increase in PQ, which is nominal GDP. Therefore, the correct answer is (A).

According to the Equation of Exchange,what Would Result from a Change