Determine the basic assumption about the velocity of money transforms the equation of exchange into the quantity theory of money?
Also: According to the quantity theory, what will happen to nominal income if the money supply increases by 5 percent and velocity does not change?
What will happen to nominal income if, instead, the money supply decreases by 8 percent and velocity does not change?
What will happen to nominal income if, instead, the money supply increases by 5 percent and velocity decreases by 5 percent?
What happens to the price level in the short run in each of these three situations?