_________GDP is the total value of production? (final goods and? services) using current prices.
Consider an illustrative economy that produces luxury pens. Assume that in 2012 this economy produced 30
luxury pens at a market price of $300 per pen. In 2013?, the number of luxury pens produced remains the same but the market price has increased to
?$400 per pen. If 2012 is the base? year, the real GDP in 2013 is $________
The nominal GDP in 2013 has
?
decreased or
increased
by_________% percent from what it was the year before.
?(Round
your answer to two decimal
places?.)
Which of the following statements are true regarding the quantity theory of? money?
?(Check
all that
apply.?)
A.
Growth rate of money
supplyequals=Growth
rate of nominal
GDPminus?Inflation
rate.
B.
Growth rate of money
supplyequals=Growth
rate of real GDP.
C.
Growth rate of money
supplyequals=Growth
rate of nominal GDP.
D.
Growth rate of money
supplyequals=Inflation
rateplus+Growth
rate of real GDP
In 2012,
Nominal GDP = 30 * $300 = $9,000
In 2013,
Nominal GDP = 30 * $400 = $12,000
Real GDP = 30 * $300 = $9,000
The real GDP in 2013 is $9,000.
Percentage change in nominal GDP = [(Nominal GDP in 2013 - Nominal GDP in 2012)/Nominal GDP in 2012] * 100
Percentage change in nominal GDP = [($12,000 - $9,000)/$9,000)] * 100 = 33.33%
Thus,
The nominal GDP in 2013 has increased by 33.33% from what it was the year before.
Following equations represents quantity theiry of money -
1. Growth rate of money suplpy = Inflation + growth rate of real GDP
2. Growth rate of money supply = Growth rate of nominal GDP
Hence, the correct answer is the option (C) and (D).
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