5) Suppose that: Mp = 800 + 0.2Y – 5000(r + n) P M5 = 1000 + 0.1Y – 3000n a. If n = 0.1 ;r = 0.1 ;Y = 2000, in equilibrium, what is the price level? b. What is the velocity? (using the same parameters as in a.) c. If output increases so that Y = 3000, what is the price level? d. What is the velocity? What is the change rate of the velocity? What does this number mean? e. Now, if a = 0.1 ;Y = 2000; and price level is forced to be P = 6, what is the equilibrium interest rate? f. What is now the velocity?

5) Suppose that: Mp = 800 + 0.2Y – 5000(r + n) P M5 = 1000 + 0.1Y – 3000n a. If n = 0.1 ;r = 0.1 ;Y = 2000, in equilibrium, what is the price level? b. What is the velocity? (using the same parameters as in a.) c. If output increases so that Y = 3000, what is the price level? d. What is the velocity? What is the change rate of the velocity? What does this number mean? e. Now, if a = 0.1 ;Y = 2000; and price level is forced to be P = 6, what is the equilibrium interest rate? f. What is now the velocity?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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