Question

**Nominal GDP increases from $5 trillion to $5.5 trillion while the price level increases by 10%. Has real income increased?**

**Nominal GDP increases from $6 trillion to $6.8 trillion while real GDP increases from $6 trillion to $6.2 trillion. What happened to the price level?**

**Nominal GDP increases from $7 trillion to $8 trillion while real GDP increases from $7 trillion to $7.5 trillion. By what percent did real income change?**

Answer #1

a. % increase in income = [(5.5 - 5) / 5] * 100 = 10%.

So, the real income has not increases, because both price and nominal income increased by 10%.

b. GDP deflator in base year = (NGDP / RGDP) * 100 = (6 trillion / 6 trillion) * 100 = 100

GDP deflator in current year = (NGDP / RGDP) * 100 = (6.8 trillion / 6.2 trillion) * 100 = 109.7

Increase in price level = [(109.7 - 100) / 100] * 100 = 9.7%.

Thus, price level will increase by 9.7%.

c. Increase in real income = [(7.5 - 7) / 100] * 100 = 7.14%.

Suppose that this year's money supply is $500 billion, nominal
GDP is $10 trillion, and real GDP is $5 trillion.
The price level is ______, and the velocity of money is
______.
.
Suppose that velocity is constant and the economy's output of
goods and services rises by 4 percent each year. Use this
information to answer the questions that follow.
If the Fed keeps the money supply constant, the price level will
_______ (rise by 4%, stay the same,...

Suppose that this year's money supply is $500 billion, nominal
GDP is $10 trillion, and real GDP is $5 trillion.
The price level is _____, and the velocity of money is
_____.
Suppose that velocity is constant and the economy's output of
goods and services rises by 3 percent each year. Use this
information to answer the questions that follow.
If the Fed keeps the money supply constant, the price level will
(stay the same, rise by 3%, or fall...

Suppose that nominal GDP was $12 trillion in 2040 in Mordor. In
2050, nominal GDP was $15 trillion in Mordor. The price level fell
5% between 2040 and 2050, and population growth was 1%. Between
2040 and 2050 in Mordor, nominal GDP growth was % and economic
growth was %. Give your answers to one decimal place. Part 2 (1.3
points) Suppose that nominal GDP was $20 trillion in 2040 in
Mordor. In 2050, nominal GDP was $18 trillion in...

Suppose this year’s nominal GDP is $1,000 million and price
level is 100. If nominal GDP increases by 2 percent and the price
level goes up by 3 percent next year, calculate next year’s nominal
GDP, price level, and real GDP.

Suppose this year’s nominal GDP is $1,000 million and price
level is 100. If nominal GDP increases by 2 percent and the price
level goes up by 3 percent next year, calculate next year’s nominal
GDP, price level, and real GDP.

Price
Level
Quantity of Real GDP Demanded
Quantity
of Real GDP supplied
($
trillion)
($ Trillion)
100
7.8
4.8
120
7.6
5.2
140
7.4
5.6
160
7.2
6.0
180
7.0
6.2
200
6.8
6.4
220
6.6
6.6
240
6.4
6.8
260
6.2
7.0
280
6.0
7.2
300
5.8
7.4
Use the data in the table above to answer the following
question. Assume the potential output level is $7.2 trillion.
The Federal Reserve uses monetary policy to close the output...

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 LOADING..., calculate the new price level after
the increase in money supply: nothing.

If a country increases its money supply by 2%, and its
nominal GDP increases by 3%, what can you say about what
happened to the velocity of money in this country?
Group of answer choices
We cannot tell which way it changed.
It decreased.
It increased.
It did not change.
None of the other options.

1. Assume that the CPI increases from 220 to
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$55,000 over the same period. This person`s real income has _____
.
A. Decreased
B. Increased by 5%
C. Increased by 10%
D. Remained the same
2. If the CPI increases from 150.0 to 157.5 over
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year?
3. Assume that in 2019 Acme sold $30 million of...

1. The government of a country increases the growth rate of the
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2.List and describe six costs of inflation. /6
3.Explain how an increase in the price level affects the real
value of money. /2
4.According to the quantity theory of money, what is the effect
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