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Suppose that this year's the money supply is $500 billion, nominal GDP is $10 trillion, and real GDP is $5trillion. a. What is the price level?
b. What is the velocity of money?
c. Suppose that velocity of money is constant and the economy's output of goods and services (real GDP) rises by 5 percent each year. What will happen to nominal GDP and the price level if the Fed keeps the money supply constant?
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