If money supply increase 10% and real GDP 2%, what happens to price level

Question

Can you please help me and answer to the question:

If money supply increase 10% and real GDP 2%, what happens to price level if money velocity does not change? How to solve or calculate it and is there a need to use equation of exchange MV = PY ?

 

 

Answer 1

theeree sae flate rate =% chaenj in $ -% chanenj in GDP

so flate rate=10%-2%=8%

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