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Suppose that the quantity theory of money holds & the velocity of money are constant at 5. Output is fixed at its full employment value of 10,000 & the price level is 2.
a) Verify nominal & real demand for money.
b) In the similar economy the government fixes the nominal money supply at 5000. With output fixed at its full employment level & with the assumption that prices are flexible, what will be the price level?
Assume that an economy's GDP Y=5000. Also assume that the government runs a deficit where tax revenue T=1000 and government expendituresG= 1500. The consumption function is represe
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