Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Chapter 28, Problem 42P
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Assume GDP is currently $10,850 billion per year and the quantity of money is $833 billion. What is the velocity of money?
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Chapter 28 Solutions
Principles of Economics 2e
Ch. 28 - Why is it important for the members of the Board...Ch. 28 - Given the danger of bank runs, why do banks not...Ch. 28 - Bank runs are often described as self-fulfilling...Ch. 28 - If the central bank sells 500 in bonds to a bank...Ch. 28 - What would be the effect of increasing the banks...Ch. 28 - Why does contractionary monetary policy cause...Ch. 28 - Why does expansionary monetary policy causes...Ch. 28 - Why might banks want to hold excess reserves in...Ch. 28 - Why might the velocity of money change...Ch. 28 - How is a central bank different from a typical...
Ch. 28 - List the three traditional tools that a central...Ch. 28 - How is bank regulation linked to the conduct of...Ch. 28 - What is a bank run?Ch. 28 - In a program of deposit insurance as it is...Ch. 28 - In government programs of bank supervision, what...Ch. 28 - What is the lender of last resort?Ch. 28 - Name and briefly describe the responsibilities of...Ch. 28 - Explain how to use an open market operation to...Ch. 28 - Explain how to use the reserve requirement to...Ch. 28 - Explain how to use the discount rate to expand the...Ch. 28 - How do the expansionary and contractionary...Ch. 28 - How do tight and loose monetary policy affect...Ch. 28 - How do expansionary, tight, contractionary, and...Ch. 28 - Which kind of monetary policy would you expect in...Ch. 28 - Explain how to use quantitative easing to...Ch. 28 - Which kind of monetary policy would you expect in...Ch. 28 - How might each of the following factors complicate...Ch. 28 - Define the velocity of the moneyCh. 28 - What is the basic quantity equation of money?Ch. 28 - How does a monetary policy of inflation target...Ch. 28 - Why do presidents typically reappoint Chairs of...Ch. 28 - In what ways might monetary policy be superior to...Ch. 28 - The term moral hazard describes increases in risky...Ch. 28 - Explain what would happen if banks were notified...Ch. 28 - A well-known economic model called the Phillips...Ch. 28 - How does rule-based monetary policy differ from...Ch. 28 - Is it preferable for central banks to primarily...Ch. 28 - Suppose the Fed conducts an open market purchase...Ch. 28 - Suppose the Fed conducts an open market sale by...Ch. 28 - All other things being equal, by how much will...Ch. 28 - Suppose now that economists expect the velocity of...Ch. 28 - If GDP is 1,500 and the money supply is 400, what...Ch. 28 - If GDP now rises to 1,600, but the money supply...Ch. 28 - If GDP now falls back to 1,500 and the money...
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Similar questions
- According to Keynes's analysis of the speculative demand for money, which of the following shows that velocity will undergo substantial fluctuations and thus cannot be treated as constant? O A. Keynes believed that money demand and hence velocity are affected by interest rates. B. Keynes believed that changes in people's expectations about what the normal level of interest rates are will cause money demand and hence velocity to fluctuate. C. Since Keynes believed velocity is affected by interest rates and interest rates fluctuate a lot, velocity will as well. D. All of the above are correct. O E. None of the above are correct.arrow_forwardIn the country of Sparta, mnoney supply equals 13 million drams, real GDP is 65 million drams, the price level is 1.2, and the velocity of money is 6. 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 78 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) v to $ million drams.arrow_forwardWhy might the velocity of money change unexpectedly?arrow_forward
- Let's assume that in our economy money supply is $15 billion, Velocity (V) is 5, and Output (Y) is $70 billlion in 2019. The base year is 2018. A. Calculate the price level (P) in this economy. B. What can you say about about inflation rate between 2018 and 2019. C. Calculate the money supply in this economy if we want inflation to be zero (0). D. If in 2021 this economy grows by 10% and money supply increases by 15%, what would be the inflation rate? Foarrow_forwardPlease help with this Questionarrow_forwardIn 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?arrow_forward
- Why Inflation is referred as monetary phenomena. explain using graphsarrow_forwardWhich of the following statements about the income velocity of money (V) is NOT correct? a. It is an indicator of the demand for money as an asset (store of wealth). b. It is equal to the ratio of GDP to some measure of the stock of money such as M2. c. It is influenced by the public expectations regarding future rates of inflation. d. none of the above.arrow_forwardWhat measures should the central bank take to reduce inflation? Show by drawing a graph.arrow_forward
- b and c partarrow_forwardDo not type in dollar signs or round any of your answers. In year one, the money supply (M) is equal to 500, the velocity of money (V) is 5, and the price level is 1.0. According to the equation of exchange, in year 1, nominal and real GDP are both equal to In year 2, the money supply is increased to 530.4 and velocity is unchanged. If the economy grew at the rate of 4 percent, real GDP in year 2 is equal to while nominal GDP in year 2 is equal to As a result of the Fed's decision to increase the money supply from 500 to 530.4, the price level rose from 1.0 to indicating that the inflation rate was percent.arrow_forwardWhat were John Maynard Keynes' criticisms of Irving Fishers theory? What are the factors that affect the demand for money?arrow_forward
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