Suppose that initially the money supply is $4.0 trillion, the price level equals 4.00, the real GDP is $6.0 trillion inbase-year dollars and income…
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Suppose that initially the money supply is $4.0 trillion, the price level equals 4.00, the real GDP is $6.0 trillion in base-year dollars and income velocity of money is 6. Then suppose that the Fed cuts the money supply in half but the income velocity of money doubles.
Calculate the price level after all these changes have taken place.
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