Basic assumption about the velocity of money transforms

Reference no: EM1370341

Determine the basic assumption about the velocity of money transforms the equation of exchange into the quantity theory of money?

Also: According to the quantity theory, what will happen to nominal income if the money supply increases by 5 percent and velocity does not change?

What will happen to nominal income if, instead, the money supply decreases by 8 percent and velocity does not change?

What will happen to nominal income if, instead, the money supply increases by 5 percent and velocity decreases by 5 percent?

What happens to the price level in the short run in each of these three situations?

Reference no: EM1370341

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