Question

A. Give the equation of exchange. For each variable in the equation, explain or define it briefly.

B. Since 2007 (quant. easing), many non-Keynesian economists (Classical) have been predicting a rapid increase in the inflation rate. Why? Use the equation in your answer.

C. Why do Keynesian economists believe increasing the money supply is a good idea? Use the equation in your answer.

D. Use the equation to explain or illustrate “Friedman’s Rule.”

E. John Taylor had an opinion about one of the variables in the equation. Identify the variable. What was his solution

? F. Use the equation to explain or illustrate the difference between regular inflation and hyper-inflation. this is the whole set of questions I need F done.... (all if possible)

Answer #1

Answer:-

Equation of Exchange:-

Equation of exchange represents a mathematical equation that shows the relationship between the 4 variables. The four variables are :- money supply, velocity of money supply, average price level and index of expenditure.

The equation is stated as:-

M*V = P*T

Where,

**M** represents the sum of all the money supply
which is circulated in the economy .

**V** reprents the velocity of money supply which
means the average number of times that certain currency units have
chnaged hands per year.

**P** refers to the price level of goods during the
year.

**T** represents the index of real value of the
aggregate transactions.

According to the Equation of exchange, it is clarified that the
total amount of money which changes hands in market or economy is
equal to the total money value of the goods in the market or
economy.

A. Give the equation of
exchange. For each variable in the equation, explain or
define it briefly.
B. Since 2007 (quant. easing), many
non-Keynesian economists (Classical) have been predicting a rapid
increase in the inflation rate. Why? Use the
equation in your answer.
C. Why do Keynesian economists believe
increasing the money supply is a good idea? Use the
equation in your answer.
D. Use the equation to
explain or illustrate “Friedman’s Rule.”
E. John Taylor had an opinion about
one of the variables in...

A. Give the equation of exchange. For each variable
in the equation, explain or define it briefly.
B. Since 2007 (quant. easing), many non-Keynesian economists
(Classical) have been predicting a rapid increase in the inflation
rate. Why? Use the equation in your
answer.
C. Why do Keynesian economists believe increasing the money
supply is a good idea? Use the equation in your
answer.
D. Use the equation to explain or illustrate
“Friedman’s Rule.”
E. John Taylor had an opinion about one of the variables in...

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