19.Suppose that the money supply is $100, the velocity of money is 4, and real GDPis 200.(a) What is nominal GDP?(b) What is the price level (the GDP deflator)?(c) Assuming that the velocity of money is constant, what will nominal GDP equalif the Fed acts to increase the money supply to $200?(d) Assuming that the velocity of money is constant and that "money is neutral inthe long run," what will real GDP equal in the long run if the Fed acts to increasethe money supply to $200?(e) Still assuming that the velocity of money is constant and that money is neutralin the long run, what will the price level equal in the long run if the Fed acts toincrease the money supply to $200?

a) Nominal GDP: From Given information: Money supply(M) = $100 Velocity of money(V) = 4 Real GDP(Y)…

19. Suppose that the money supply is $100, the velocity of money is 4, and real GDP is 200. (a) What is nominal GDP? (b) What is the price level (the GDP deflator)? (c) Assuming that the velocity of money is constant, what will nominal GDP equal if the Fed acts to increase the money supply to $200?

19. Suppose that the money supply is $100, the velocity of money is 4, and real GDP is 200. (a) What is nominal GDP? (b) What is the price level (the GDP deflator)? (c) Assuming that the velocity of money is constant, what will nominal GDP equal if the Fed acts to increase the money supply to $200?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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