If the velocity of money increases from 10 to 11 and real GDP increases from $1 billion to $1.2,what will the Bank of Canada need to do keep prices the same?

Question

Quizplus · Accepted Answer

To keep prices the same, the money supply must increase by the same percentage as the increase in real GDP and velocity. Real GDP increased by 20% and velocity by 10%, so the money supply should increase by 10% to offset the velocity increase.

If the Velocity of Money Increases from 10 to 11