Consider a simple economy that produces only pies. The following table contains information on the economy's money supply, velocity of money, price level, and output. For example, in 2019, the money supply was $240, the price of a pie was $7.20, and the economy produced 500 pies. Fill in the missing values in the following table, selecting the answers closest to the values you calculate. Year Quantity of Money Velocity of Money Price Level Quantity of Output Nominal GDP (Dollars) (Dollars) (Pies) (Dollars) 2019 240 7.20 500 3,600.00 2020 252 15 7.56 500 3,780.00 The money supply grew at a rate of5% from 2019 to 2020. Since pie output did not change from 2019 to 2020 and the velocity of money , the change in the money supply was reflected in changes in the price level. The inflation rate from 2019 to 2020 was .
Consider a simple economy that produces only pies. The following table contains information on the economy's money supply, velocity of money, price level, and output. For example, in 2019, the money supply was $240, the price of a pie was $7.20, and the economy produced 500 pies. Fill in the missing values in the following table, selecting the answers closest to the values you calculate. Year Quantity of Money Velocity of Money Price Level Quantity of Output Nominal GDP (Dollars) (Dollars) (Pies) (Dollars) 2019 240 7.20 500 3,600.00 2020 252 15 7.56 500 3,780.00 The money supply grew at a rate of5% from 2019 to 2020. Since pie output did not change from 2019 to 2020 and the velocity of money , the change in the money supply was reflected in changes in the price level. The inflation rate from 2019 to 2020 was .
Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles
Section: Chapter Questions
Problem 8E
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Consider a simple economy that produces only pies. The following table contains information on the economy's money supply, velocity of money, price level, and output. For example, in 2019, the money supply was $240, the price of a pie was $7.20, and the economy produced 500 pies.
|
Year
|
Quantity of Money
|
Velocity of Money
|
Price Level
|
Quantity of Output
|
Nominal GDP
|
|---|---|---|---|---|---|
|
(Dollars)
|
(Dollars)
|
(Pies)
|
(Dollars)
|
||
| 2019 | 240 |
|
7.20 | 500 | 3,600.00 |
| 2020 | 252 | 15 | 7.56 | 500 | 3,780.00 |
The money supply grew at a rate of5% from 2019 to 2020. Since pie output did not change from 2019 to 2020 and the velocity of money , the change in the money supply was reflected in changes in the price level. The inflation rate from 2019 to 2020 was .
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