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Suppose that initially the money supply is $1 trillion, the price level equals 3, the real GDP is $5 trillion inbase-year dollars, and income.

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Hello, please explain.

Suppose that initially the money supply is ​$1 ​trillion, the price level equals 3​, the real GDP is ​$5 trillion in​ base-year dollars, and income velocity of money is 15. Then the money supply increases by ​$100 ​billion, while real GDP and income velocity of money remain unchanged.

a.    According to the quantity theory of money and prices, calculate the new price level after the increase in money​ supply:

Thank you!

 
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