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14 July, 22:58

How might an economist gather empirical data to test the proposed relationship between money and the price level?

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  1. 14 July, 23:33
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    The quantity theory of money says that:

    M V = P Y

    where M is money supply, V is income velocity of money, P is price level and Y is income level.

    Using the analyze of the empirical data, we can say that there is a long-run association between money and price.
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