- Velocity and the quantity equation onsider a simple economy that produces only pens. The following table contains information on the economy's money supply, velocity of money, pri evel, and output. For example, in 2019, the money supply was $320, the price of a pen was $8.00, and the economy produced 600 pens. ill in the missing values in the following table, selecting the answers closest to the values you calculate. Quantity of Money Price Level Quantity of Output Nominal GDP Year (Dollars) Velocity of Money (Dollars) (Pens) (Dollars) 2019 320 8.00 600 2020 336 15 600 he money supply grew at a rate of from 2019 to 2020. Since pen 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 020 was

- Velocity and the quantity equation onsider a simple economy that produces only pens. The following table contains information on the economy's money supply, velocity of money, pri evel, and output. For example, in 2019, the money supply was $320, the price of a pen was $8.00, and the economy produced 600 pens. ill in the missing values in the following table, selecting the answers closest to the values you calculate. Quantity of Money Price Level Quantity of Output Nominal GDP Year (Dollars) Velocity of Money (Dollars) (Pens) (Dollars) 2019 320 8.00 600 2020 336 15 600 he money supply grew at a rate of from 2019 to 2020. Since pen 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 020 was

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: Money Growth And Intlation

Section: Chapter Questions

Problem 2CQQ

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2. Answer the following questions. 2.1 One good: barley. The economy has enough labor, capital, and land to produce Y = 800 bushels of barley. V is constant. In 2020, money supply (MS) = $2,000 P = $10/bushel. For 2021, the central bank increases MS by 10%. According to the quantity equation, compute the 2021 values of nominal GDP and P. Compute the inflation rate for 2020–2021. 2.2 If you deposit money in the bank for one year. Scenario 1: nominal interest rate = 10%, inflation rate = 0% Scenario 2: nominal interest rate = 25%, inflation rate = 15% In which scenario does the real value of your deposit grow the most? Explain. 2.3 Inflation distorts relative prices. What does this mean and why does it impose a cost on society?
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. Year Quantity of Money Velocity of Money Price Level Quantity of Output Nominal GDP (Dollars) (Dollars) (Pies) (Dollars) 2019 240 7.20 500 2020 252 15 500 The money supply grew at a rate of 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 .
In 2019, an economy produces wheat only and has enough labor, capital, and land to produce 500bushels of wheat (Y or real GDP). Price of wheat and money supply are $2 per bushel and $1,000respectively. In 2020, the central bank increases money supply by $ 1040. Suppose both the velocity ofmoney (V) and the amount of wheat produced remain unchanged. a. Compute the velocity of money and nominal GDP in 2019. b. Calculate inflation rate in year 2020. c. Use a well-labelled money supply-demand diagram to illustrate and explain what happen to the pricelevel and the value of money after such money injection?
Consider a simple economy that produces only cell phones. The following table contains information on the economy's money supply, velocity of money, price level, and output. For example, in 2018, the money supply was $280, the price of a cell phone was $7.00, and the economy produced 600 cell phones. 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) (Cell phones) (Dollars) 2018 280 7.00 600 2019 294 15 600 The money supply grew at a rate of_____ from 2018 to 2019. Since cell phone output did not change from 2018 to 2019 and the velocity of money _____ , the change in the money supply was reflected _____ in changes in the price level. The inflation rate from 2018 to 2019 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 2016, the money supply was 100, the price of a pie was $5.00, and the economy produced 200 pies. Fill in the missing values in the following table, rounding to the nearest cent when necessary. Year Money Supply Velocity of Money Price Level Quantity of Output Nominal GDP (Dollars) (Dollars) (Pies) (Dollars) 2016 100 5.00 200 2017 105 10 200 The money supply grew at a rate of______% from 2016 to 2017. Since pie output did not change from 2016 to 2017 and the velocity of money _______ , the change in the money supply was reflected _________ in changes in the price level. The inflation rate from 2016 to 2017 was _____%.
E4 Assume the real money demand of an economy is:(Md/P) = 2×Yb(r + πe)-awhere 0 < b < 1 and 0 < a < 1.a) Use the real money demand above to determine the velocity of money.b) Does the quantity theory of money hold in this economy? Explain.c) Show with calculus how the velocity of money reacts to a change in output and a changein the nominal interest rate.d) Find the income and the nominal interest rate elasticities of money demand.
1. Let’s consider a hypothetical economy where this year’s money supply is Tk.100, nominal GDP is Tk. 40000 and real GDP is Tk. 5000.a) What does the quantity theory of money say?b) Calculate the price level.c) Calculate the velocity of money.d) Suppose the central bank changes the money supply so that the new money supply is Tk. 500, calculate the newprice level.
1.Show that interest rate has an impact on the income velocity of money. ii Distinguish between Fisher’s quantity theory and Keynesian’s theory of money
estion list uestion 11 question 12 uestion 13 estion 14 estion 15 estion 16 K Suppose the Bank of Canada increases the quantity of money. Complete the sentences. market determines the real interest rate. adjusts to make the quantity of real money supplied equal to the quantity demanded. In the long run, supply and demand in the The money; inflation rate loanable funds; nominal interest rate O A. OB. OC. loanable funds; price level O D. money; bond price usic V makes aun | Aujla RE- sew Mus RAC HA A C
PART I: SHORT RESPONSE6. If you lived in a village cut off from the rest of the world, show how Say’s law would apply to your village’s economy.13. If you had a job as a financial counselor and a bad recession hit, what advice would you give your clients to enable them to keep their heads above water?14. Using the AD/AS diagram possibilities, explain which diagram explains the scenarios and why that is the diagram that fits the scenario best:Â· U.S. Federal Reserve allows money supply to fall during 1930sÂ· Federal spending increased during World War IIÂ· Investment tax credits of 1960sÂ· Oil price increases of 1970s15. Using the Keynesian aggregate expenditure model, sketch the diagram corresponding to the following historical events and explain their importance:Â· Tax increases of 1990sÂ· Vietnam War spending of 1960sâ€“1970sÂ· Tax cuts of 2000sPART II: JOURNAL ACTIVITYJournal Activity…
Consider a simple economy that produces only pens. The following table contains information on the economy's money supply, velocity of money, price level, and output. For example, in 2017, the money supply was $280, the price of a pen was $7.00, and the economy produced 600 pens. Fill in the missing values in the following table, selecting the answers closest to the values you calculate. Year Quantity of Money (Dollars) Velocity of Money Price Level (Dollars) Quantity of Output (Pens) Nominal GDP 2017 280 7.00 600 2018 294 15 600 The money supply grew at a rate of ____ % from 2017 to 2018. Since pen output did not change from 2017 to 2018 and the velocity of money (a. increased, b. decreased, c. remained the same), the change in the money supply was reflected (a. entirely, b. partially) in changes in the price level. The inflation rate from 2017 to 2018 was ____%.