1. Recalling the quantity theory of money equation, Mv=PY, what is the dynamic form of the equation? I 2. If the change in Money = 5% and change in v = 0%, what are the possible values for the change in P and Y? 3. Define a "real shock"
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The dynamic form of the quantity theory of money equation is: ΔM + Δv = ΔP + ΔY This equation shows the relationship between changes in the money supply (ΔM), changes in the velocity of money (Δv), changes in the price level (ΔP), and changes in real output (ΔY). Show more…
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