00:01
So the question says that if the velocity does not change when the money supply of a country increase, how will be the change for a nominal gdp and real gdp? so firstly, we need to write down the equation for quantity theory of money.
00:15
It is written as m times v equals p times y.
00:19
So that is money supply times velocity equals price times real output.
00:25
Okay, so basically this one is real output where we say this is real gdp.
00:31
But this term, p times y, would be the definition for nominal gdp.
00:38
Okay.
00:39
So we know that the percentage change by definition, the percentage change of money supply plus the percentage change of velocity equals the percentage change of price times the percentage change of real gdp.
00:54
So if we see some increase in money supply, but there's no increase in velocity change, then as a result, this one increase and this one not change...