A. If the money supply equals 100 and monetary velocity is 5, what is nominal GDP? Explain your answer.

ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter15: Monetary Theory And Policy
Section: Chapter Questions
Problem 3.7P
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A. If the money supply equals 100 and monetary velocity is 5, what is nominal GDP? Explain your answer.

B. Suppose monetary velocity is growing at 2 percent, the rate of change of the money supply is 3 percent and real GDP grows at 4 percent. What is the rate of inflation, as measured by the rate of change of the GDP deflator? Explain your answer.

C. A zero-coupon bond with a yield to maturity of 4% matures five years from now and will pay out €130. Show how to calculate the current price of this bond. (I don’t need the actual figure for the price)

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