[The following scenario applies to the next two questions.] In 20X2, real GDP = 783, the price level = 114, and the nominal wage rate= 35.48 / hour In 20X3, real GDP = 816, the price level = 161, and the nominal wage rate= 42.39 / hour The real interest rate, inflation rate, and bank transaction costs do not change, and the real demand for money is proportional to real GDP. Question 1.8: Nominal money supply What is the percentage change in the nominal money supply from 20X2 to 20X3? A. 42.93% B. 44.35% C. 45.76% D. 47.18% E. 48.60% Question 1.9: Marginal product of labor What is the percentage change in the marginal product of labor from 20X2 to 20X3? A. -15.40% B. -15.86% C. -16.33% D. -16.79% E. -17.25%

[The following scenario applies to the next two questions.] In 20X2, real GDP = 783, the price level = 114, and the nominal wage rate= 35.48 / hour In 20X3, real GDP = 816, the price level = 161, and the nominal wage rate= 42.39 / hour The real interest rate, inflation rate, and bank transaction costs do not change, and the real demand for money is proportional to real GDP. Question 1.8: Nominal money supply What is the percentage change in the nominal money supply from 20X2 to 20X3? A. 42.93% B. 44.35% C. 45.76% D. 47.18% E. 48.60% Question 1.9: Marginal product of labor What is the percentage change in the marginal product of labor from 20X2 to 20X3? A. -15.40% B. -15.86% C. -16.33% D. -16.79% E. -17.25%

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter20: Monetary Policy

Section: Chapter Questions

Problem 4SQP

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According to the transmission mechanism of money,a. For constant output, if the real money supply exceeds the real quantity of money demanded, what will happen to the real interest rate that clears the asset market? (In describing the adjustment of the real interest rate, use the relationship that exists between the price of a non-monetary asset and the interest rate that it pays). Is money effective? (Does the change in nominal money supply cause real output to change?). Explain with details.
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