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Velocity in the country of Nemedia is always stable. In 2001, the money supply was $100 billion and real GDP was $300 billion.
18. Velocity in the country of Nemedia is always stable. In 2001, the money supply was $100 billion and real GDP was $300 billion. In 2002, the money supply increased by 10 percent, real GDP increased by 5 percent and nominal GDP equaled $660 billion. By how much did the price level increase between 2001 and 2002? A. 10 percent b. 9.5 percent c. 4.76 percent d. There is not enough information to answer the question. B. If velocity is stable and money is neutral, an increase in the money supply creates a proportional increase in the price level. A. If velocity is stable, an increase in the money supply creates a proportional increase in nominal output. 19. Which of the following is not implied by the quantity equation? A. If velocity is stable, an increase in the money supply creates a proportional increase in nominal output. B. If velocity is stable and money is neutral, an increase in the money supply creates a proportional increase in the price level. C. With constant money
