M + V = P + Y

M : 22million

V : 4.5

P : 1.1

Y : 90mil

Using %M + %V = %P + %Y, solve the next question

1. Suppose that the velocity stays constant year to year. The output of goods and services rises by 3% each year. The central bank is increasing the money supply by 7% each year. How much will the nominal GDP and the price level increase annually as a result? (in percent change)
2. Calculate the new level of nominal GDP and the price level after one year.