4. This question combines quantity theory of money and AD curve. Suppose there are two countries: the U.K. and the U.S. Here is the table of money supply (M) and output (Y) of year 2020 and 2021 for both countries. Country M Y Year The U.K. 2020 $500 1000 2021 $550 1050 The U.S. 2020 $1000 2000 2021 $1200 2360 a. Assuming V is fixed, calculate the inflation rates of each country. b. Based on the answers in part (a), what can we say above the net export of each country (increase or decrease)? Explain. c. Based on the answers in part (b), which direction the AD curve of each country shift?

4. This question combines quantity theory of money and AD curve. Suppose there are two countries: the U.K. and the U.S. Here is the table of money supply (M) and output (Y) of year 2020 and 2021 for both countries. Country M Y Year The U.K. 2020 $500 1000 2021 $550 1050 The U.S. 2020 $1000 2000 2021 $1200 2360 a. Assuming V is fixed, calculate the inflation rates of each country. b. Based on the answers in part (a), what can we say above the net export of each country (increase or decrease)? Explain. c. Based on the answers in part (b), which direction the AD curve of each country shift?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter24: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 1CQQ

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