If the money supply is $20,000,velocity is 3,and Real GDP is 5,000 units of output,then the price level is _____________.If the money supply doubled over a short time period to $40,000,the simple quantity theory of money would predict that _____________________.

Question

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The price level is calculated using the equation MV = PY, where M is the money supply, V is velocity, P is the price level, and Y is Real GDP. Substituting the given values: $20,000 * 3 = P * 5,000, solving for P gives $12. If the money supply doubles, the simple quantity theory of money predicts that the price level would double, assuming velocity and real GDP remain constant.

If the Money Supply Is $20,000,velocity Is 3,and Real GDP