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In the country of Sparta, money supply equals 11 million drams, real GDP is 80 million drams, the price level is 1.1, and the velocity of money is 8. a. What is the value of its nominal GDP? Nominal GDP: $| |million drams. b. If, in the next year, V remains constant and real GDP increases to 88 million drams, what must happen to money supply in order to keep prices stable? Round your answer below to 1 decimal place. Money supply must (Click to select) to $ ]million drams.

In the country of Sparta, money supply equals 11 million drams, real GDP is 80 million drams, the price level is 1.1, and the velocity of money is 8. a. What is the value of its nominal GDP? Nominal GDP: $| |million drams. b. If, in the next year, V remains constant and real GDP increases to 88 million drams, what must happen to money supply in order to keep prices stable? Round your answer below to 1 decimal place. Money supply must (Click to select) to $ ]million drams.

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Monetary System
Section: Chapter Questions
Problem 10PA
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In the country of Sparta, money supply equals 11 million drams, real GDP is 80 million drams, the price level is 1.1, and the velocity of money is 8. a. What is the value of its nominal GDP? Nominal GDP: $ |million drams. b. If, in the next year, V remains constant and real GDP increases to 88 million drams, what must happen to money supply in order to keep prices stable? Round your answer below to 1 decimal place. Money supply must (Click to seleci) ♥ to $ million drams.
Transcribed Image Text:In the country of Sparta, money supply equals 11 million drams, real GDP is 80 million drams, the price level is 1.1, and the velocity of money is 8. a. What is the value of its nominal GDP? Nominal GDP: $ |million drams. b. If, in the next year, V remains constant and real GDP increases to 88 million drams, what must happen to money supply in order to keep prices stable? Round your answer below to 1 decimal place. Money supply must (Click to seleci) ♥ to $ million drams.
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