If Suppose that C = $900, 1 = $300, G = $200, NX = $100, and...

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If Suppose that C = $900, 1 = $300, G = $200, NX = $100, and that the money supply is equal to $300. Based upon these assumptions, velocity is equal to consumption and velocity both rise beyond their initial levels, then it follows that another component of spending. necessarily fall. If Suppose that C = $900, 1 = $300, G = $200, NX = $100, and that the money supply is equal to $300. Based upon these assumptions, velocity is equal to consumption and velocity both rise beyond their initial levels, then it follows that another component of spending. necessarily fall.

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To calculate velocity we can use the equation of exchange MV PY Where M Money supply V Velocity of m... View the full answer