Consider an economy made up of a butcher and a baker. Each period
the butcher sells 4 pounds of meat to the baker for $5 each and the baker sells 10 loaves of bread to the butcher also for $2 each.
A) What is the NGDP here?
B) If the money supply is $5, what is the velocity?
C) Lets call the price level 10, what does that make Y?
D) If the money supply increases to $12, what would you expect Y,V, and P to be in the long run?
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