The equation of exchange is given by M x V = PXQ, where M is the money supply, V is the velocity of money, P is the economy's price level, and Q is Real GDP. Suppose the following diagram shows the current aggregate demand (AD) and aggregate supply (AS) curves in a hypothetical economy. PRICE LEVEL 18 15 12 2 4 AS 6 8 REAL GDP (Trillions of dollars) What is the GDP of this economy? $36 trillion O $72 trillion AD 10 12 ŏ 2 ½ 2 ?

The equation of exchange is given by M x V = PXQ, where M is the money supply, V is the velocity of money, P is the economy's price level, and Q is Real GDP. Suppose the following diagram shows the current aggregate demand (AD) and aggregate supply (AS) curves in a hypothetical economy. PRICE LEVEL 18 15 12 2 4 AS 6 8 REAL GDP (Trillions of dollars) What is the GDP of this economy? $36 trillion O $72 trillion AD 10 12 ŏ 2 ½ 2 ?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter26: Monetary Policy

Section: Chapter Questions

Problem 3P

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