Pearson eText Economics -- Instant Access (Pearson+)
13th Edition
ISBN: 9780136879459
Author: Michael Parkin
Publisher: PEARSON+
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Question
Chapter 29, Problem 6SPA
(a)
To determine
Identify the growth rate of the quantity of money.
(b)
To determine
Identify the growth rate of the quantity of money.
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Japan's money supply is growing rapidly at a 5.54% while real GDP is increasing at 8.29%. Japan's real interest rate is also growing at 4.46%.
*we are assuming Quantity Theory of Money, Classical Dihotomy, and Fisher Effect effect are true.
a. calculate the inflation rate
b. calculate nominal interest rate
c. calculate GDP growth rate
complete the following sentence:
There is a
association between inflation and the
growth rate of money
Select one:
a. positive; supply
b. negative; demand
c. positive; demand
d. negative; supply
If nominal GDP in an economy is $1500 and the money supply is $500, what is the velocity of money?
a. 333
b. 5
c. 3
d. 7500
Chapter 29 Solutions
Pearson eText Economics -- Instant Access (Pearson+)
Ch. 29.1 - Prob. 1RQCh. 29.1 - Prob. 2RQCh. 29.1 - Prob. 3RQCh. 29.1 - Prob. 4RQCh. 29.1 - Prob. 5RQCh. 29.2 - Prob. 1RQCh. 29.2 - Prob. 2RQCh. 29.2 - Prob. 3RQCh. 29.2 - Prob. 4RQCh. 29.2 - Prob. 5RQ
Ch. 29.2 - Prob. 6RQCh. 29.2 - Prob. 7RQCh. 29.3 - Prob. 1RQCh. 29.3 - Prob. 2RQCh. 29.3 - Prob. 3RQCh. 29.3 - Prob. 4RQCh. 29.3 - Prob. 5RQCh. 29.3 - Prob. 6RQCh. 29.4 - Prob. 1RQCh. 29.4 - Prob. 2RQCh. 29.4 - Prob. 3RQCh. 29.4 - Prob. 4RQCh. 29 - Prob. 1SPACh. 29 - Prob. 2SPACh. 29 - Prob. 3SPACh. 29 - Prob. 4SPACh. 29 - Prob. 5SPACh. 29 - Prob. 6SPACh. 29 - Prob. 7SPACh. 29 - Prob. 8SPACh. 29 - Prob. 9APACh. 29 - Prob. 10APACh. 29 - Prob. 11APACh. 29 - Prob. 12APACh. 29 - Prob. 13APACh. 29 - Prob. 14APACh. 29 - Prob. 15APACh. 29 - Prob. 16APACh. 29 - Prob. 17APACh. 29 - Prob. 18APACh. 29 - Prob. 19APACh. 29 - Prob. 20APACh. 29 - Prob. 21APACh. 29 - Prob. 22APACh. 29 - Prob. 23APACh. 29 - Prob. 24APA
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- If the velocity of circulation is growing at 1 percent a year, the real inter- est rate is 2 percent a year, the nominal interest rate is 7 percent a year, and the growth rate of real GDP is 3 percent a year, calculate the inflation rate, the growth rate of money, and the growth rate of nominal GDP.arrow_forwardThe velocity of circulation is growing at 5 percent a year, the real interest rate is 5 percent a year, the nominal interest rate is 10 percent a year, and the growth rate of real GDP is 3 percent a year. Calculate the inflation rate, the growth rate of money, and the growth rate of nominal GDP. stion Heip The inflation rate is percent a year. Enter your answer in the answer box and then click Check Answer. 2 parts remaining Clear All Check Answer javascript:doExercise(8); MacBook At DII 888 F12 吕0 F9 F10 F7 F8 F5 F6 F4 esc F2 F3 F1 $ % & # dele 1 2 3 4 5 T Y U Q W E tab K F G A S caps lock х C V shift command optic Bommand 身 I Rarrow_forwardIn the country Constantania, suppose the velocity of money is always the same. Last year, the money supply was $2 billion and real GDP was $5 billion. This year, the money supply increased by 6 percent, real GDP by 4 percent, and nominal GDP is $6.5 billion. a) Calculate the velocity of money and the price levels in the two years, and then calculate the inflation rate. b) Calculate the inflation rate using the formula AM/M + AV/V = AP/P + AY/Y, where the Greek letter A represents a change and the ratio AM/Mx 100 is the percentage change (or the rate of change) in M. Compare this result with the result you obtained in part a. Why could there be some difference? c) What is the difference between commodity money and fiat money? Why do people accept fiat currency in trade for goods and services?arrow_forward
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