4. Velocity and the quantity equation 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 2018, the money supply was $360, the price of a pen was $4.50, and the economy produced 800 pens. Fill 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) 2018 360 4.50 800 2019 378 10 800 The money supply grew at a rate of from 2018 to 2019. Since pen 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
4. Velocity and the quantity equation 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 2018, the money supply was $360, the price of a pen was $4.50, and the economy produced 800 pens. Fill 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) 2018 360 4.50 800 2019 378 10 800 The money supply grew at a rate of from 2018 to 2019. Since pen 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
Chapter1: Making Economics Decisions
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Transcribed Image Text:4. Velocity and the quantity equation
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 2018, the money supply was $360, the price of a pen was $4.50, and the economy produced 800 pens.
Fill 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)
2018
360
4.50
800
2019
378
10
800
The money supply grew at a rate of
from 2018 to 2019. Since pen 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
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