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Question
If initially the money supply is $2 trillion, velocity is 5, the price level is 2, and real GDP is $5 trillion, a fall in the money supply to $1 trillionA. reduces real GDP to $2.5 trillion.
B. causes velocity to rise to 10.
C. decreases the price level to 1.
D. decreases the price level to 1 and decreases velocity to 2.5.
Answer
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