Please show me step by step how to solve problem. Suppose that an economy is cha

Question

Please show me step by step how to solve problem.
Suppose that an economy is characterized by
M = $6,000 billion
V = 2.5
P = 100
a. What is the real value of output (Q)?
Now assume that the Fed increases the money supply by 10 percent and velocity remains unchanged.

b. If the price level remains constant, by how much will real output increase?
c. If, instead, real output is fixed at the natural level of unemployment, by how much will prices rise?
d. By how much would V have to fall to offset the increase in M?

Explanation / Answer

a. 150 billion b.165 Billion or 10% c.10% since rising prices won't create any new profits incentives for increasing output d.0.05

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