Price stability: Suppose you are the head of the central bank and your mandateis to maintain the price level at a constant value. Explain what you would doto the money supply in response to each of the following events:(a) Real GDP increases by 4% during a boom.(b) Real GDP declines by 1% during a recession.(c) Real GDP is growing at 3% per year.(d) Te velocity of money increases by 2%.(e) Te velocity of money declines by 1%.

Q: C = 100 + 0.5 - (Y – T) I = 200 – 1000 - r where Y is real output and r is the real interest rate.…

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Q: 4the money supply in freedonia this year is $150 billion Nominal GDP is $750 billions and real GDP…

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Q: C = 100 + 0.5 · (Y – Î) I = 500 – 1000 - r where Y is real output and r is the real interest rate.…

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Q: C = 100 + 0.5 · (Y – Ť) I = 200 – 1000 - r where Y is real output and r is the real interest rate.…

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A: Given: M= Y/(1+it)Y= 150, it= nominal interest rate in period t, real interest rate = 4%

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Q: C = 100 + 0.5 - (Y – T) 1 = 500 – 1000 -r where Y is real output and r is the real interest rate.…

A: Given; C=100+0.5(Y-T) I= 500-1000r G=500 T=100 Y=2000 LM Curve is;                  MP=Y5i where; P=…

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Q: Assume that the velocity of money is constant in the short run. Assume that the real GDP grows by 4…

A: Velocity(V) = constant Growth of real GDP (Y) = 4% Money supply (M)= 5% Price level(P)= ?

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A:

Q: C = 100 + 0.5 · (Y – T) I= 500 – 1000 - r where Y is real output and r is the real interest rate.…

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Q: C = 100 + 0.5 · (Y - T) I = 200 – 1000 - r where Y is real output and r is the real interest rate.…

A: C=100+0.5(Y-T) I= 200-1000r G=300 T=200 Y=1000 LM Curve is; MP = Y10iwhere P = Price leveli =…