Calculate what happens to nominal GDP if velocity remains constant at 5 and the money supply increases from $350 billion to $525 billion. Originally, nominal GDP is $ nothing trillion. (Round your response to two decimal places. )

The nominal GDP is increased by $0.87 trillion

Explanation:

For computing the changes in nominal GDP, first we have to compute the old GDP and new GDP, the formula is shown below:

Old GDP = Velocity of money * old money supply

= 5 * $350

= $1.75 trillion

And, the new GDP equal to

= Velocity of money * old money supply

= 5 * $525

= $2.62 trillion

So, by increasing the money supply from $350 billion to $525 billion, the nominal GDP also increases from $1.75 trillion to $2.62 trillion.

Hence, the nominal GDP is increased by $0.87 trillion