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Given the above, what will happen to the price level if the central bank increases quantity of money in circulation from 50,000 to 100,000? a) Price Level will decrease from 100 to 50 b) Price Level will increase from 100 to 500 c) Price Level will increase from 100 to 200 d) Price Level will remain unchanged e) None of the above.

Given the above, what will happen to the price level if the central bank increases quantity of money in circulation from 50,000 to 100,000? a) Price Level will decrease from 100 to 50 b) Price Level will increase from 100 to 500 c) Price Level will increase from 100 to 200 d) Price Level will remain unchanged e) None of the above.

Economics:
Economics:
10th Edition
ISBN:9781285859460
Author:BOYES, William
Publisher:BOYES, William
Chapter13: Monetary Policy
Section: Chapter Questions
Problem 6E
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Given the above, what will happen to the price level if the central bank increases quantity of money in circulation from 50,000 to 100,000?

a) Price Level will decrease from 100 to 50

b) Price Level will increase from 100 to 500

c) Price Level will increase from 100 to 200

d) Price Level will remain unchanged

e) None of the above.

Given the following: MV = PQ V = 2 Q = 1000 P = 100 (Quantity of Money in circulation) x (Velocity of money) = (Price) x (Real output) Velocity is equal to 2 and is constant Output is equal to 1000 and the economy is at full employment Price is equal to 100 Given the above, what will happen to the price level if the central bank increases quantity of money in circulation from 50,000 to 100,000? O Price Level will decrease from 100 to 50 Price Level will increase from 100 to 500 Price Level will increase from 100 to 200 Price Level will remain unchanged O None of the above.
Transcribed Image Text:Given the following: MV = PQ V = 2 Q = 1000 P = 100 (Quantity of Money in circulation) x (Velocity of money) = (Price) x (Real output) Velocity is equal to 2 and is constant Output is equal to 1000 and the economy is at full employment Price is equal to 100 Given the above, what will happen to the price level if the central bank increases quantity of money in circulation from 50,000 to 100,000? O Price Level will decrease from 100 to 50 Price Level will increase from 100 to 500 Price Level will increase from 100 to 200 Price Level will remain unchanged O None of the above.
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