**Unformatted text preview: **P Y ). • Real GDP is determined by the economy’s supplies of K and L and the production function (Ch. 3). • Therefore, if Y is also fixed, then the price level is proportional to the money supply. 4-18 The quantity theory of money, cont. • Recall from Chapter 2: The growth rate of a product equals the sum of the growth rates....

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- Spring '13
- khan
- Economics, Macroeconomics, Inflation, Monetary economics, Quantity Theory of Money, gross domestic product, Quantity Theory