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Using the quantity equation of money mv=pq, calculate the money supply (m) if velocity (v) equals 4, the price level (p) equals 100, and real gdp (q) equals 125.

Respuesta :

The money supply using  the quantity equation of money mv=pq, will be 3125.

We have,

The quantity equation of money,

i.e. mv = pq,

Here,

m = money supply,

v = velocity ,

p = price level,

q = real gdp

So,

Now,

According to the question,

To find money supply,

We will use The quantity equation of money,

i.e. mv = pq,

So,

Now,

Putting values,

i.e.

Money supply × velocity = price level × real gdp,

i.e.

m × 4 = 100 × 125

On solving we get,

m = 3125

i.e.

Money supply = 3125,

So,

The money supply using the quantity equation of money  = 3125.

Hence we can say that the money supply using the quantity equation of money mv = pq, will be 3125.

Learn more about quantity equation of money here

https://brainly.com/question/15184412

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