If the money supply is $3,000,velocity is 4 and the price level is $2,then Real GDP is _____________ units of output.If the money supply doubled over a short time period to $6,000,the simple quantity theory of money would predict that ______________________.

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Using the equation of exchange, MV = PQ, where M is the money supply, V is the velocity of money, P is the price level, and Q is the real GDP. Initially, M = $3,000, V = 4, P = $2. Solving for Q gives us Q = (MV)/P = ($3,000*4)/$2 = $6,000. If the money supply doubles to $6,000 and velocity remains constant, according to the quantity theory of money, if the money supply increases and velocity and real GDP remain constant, the price level would double to maintain the equation's balance.

If the Money Supply Is $3,000,velocity Is 4 and the Price