Question

1. Suppose the supply of money, measured by M1, is $2.9 trillion, output, measured by real GDP, is $15.8 trillion, and the velocity of money is 7.6. Suppose the supply of money increases to $3.9 trillion but GDP and the velocity of money do not change. What is the percent by which prices change? Provide your answer as a percentage rounded to two decimal places. Do not include any symbols, such as "$," "=," "%," or "," in your answer.

2. Suppose the price level, as measured by the GDP deflator, is 1.15, the supply of money, measured by M1, is $2.2 trillion, and output, measured by real GDP, is $18.1 trillion. What is the velocity of money? Provide your answer as a number rounded to two decimal places. Do not include any symbols, such as "$," "=," "%," or "," in your answer.

Answer #1

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Suppose the supply of money, measured by M1, is $2.4 trillion,
output, measured by real GDP, is $19.9 trillion, and the velocity
of money is 7.7. Suppose the supply of money increases to $4.0
trillion but GDP and the velocity of money do not change. What is
the percent by which prices change? Provide your answer as a
percentage rounded to two decimal places. Do not include any
symbols, such as "$," "=," "%," or "," in your answer.

Suppose the supply of money, measured by M1, is $3.2 trillion,
output, measured by real GDP, is $20.2 trillion, and the velocity
of money is 6.7. Suppose the supply of money increases to $4.1
trillion but GDP and the velocity of money do not change. What is
the percent by which prices change? Provide your answer as a
percentage rounded to two decimal places.

Suppose GDP is 16.0 trillion and aggregate expenditures are 20.6
trillion. How does inventory change? Calculate the change in the
level of inventory, if any. Provide your answer in dollars measured
in trillions rounded to two decimal places. Use a negative sign "-"
to indicate a decrease in inventory but do not include any other
symbols, such as "$," "=," "%," or "," in your answer.
Suppose for every 10 thousand dollar increase in income,
consumption increases by 9.0 thousand...

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.

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 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,...

1. Problems and Applications Q1
Suppose that this year's money supply is $400 billion, nominal
GDP is $12 trillion, and real GDP is $4 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
, and nominal...

1. If money supply increased by 3%, real output increased by 1%,
and prices increased by 2%, is money neutral? why?
2. If you responded to the previous subquestion that money is
neutral, what needs to be changed for money to become
non-neutral?
3. According to the quantity of money, if money stock is equal
to 15 trillion euro, real GDP is 20 trillion euro, and price index
is 1.1, what is V?
4. How do you interpret the number...

Suppose that this year’s money supply is $400 billion, nominal
GDP is $10trillion, and real GDP is $4 trillion.
1.What is the price level? What is the velocity of money?
2. Suppose that velocity is constant and the economy’s output of
goods and services rises by4% each year. What will happen to
nominal GDP and the price level next year if the Fed keeps the
money supply constant?
3.What money supply should he Fed set next year if it wants...

1. Use the quantity theory of money equation to address the
following questions. Use the following as initial values: M = $4
trillion, V = 3, P = 1, Y = $12 trillion. (2 points) MV = PY a. All
other things being equal, by how much will nominal GDP expand if
the central bank increases the money supply to $4.2 trillion and
velocity remains constant? Show your work and explain your answer.
b. Reset your values to the initial...

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