Answered: Consider a simple economy that produces…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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 2017, the money supply was $280, the price of a pen was $7.00, and the economy produced 600 pens.

Fill in the missing values in the following table, selecting the answers closest to the values you calculate.

Year	Quantity of Money (Dollars)	Velocity of Money	Price Level (Dollars)	Quantity of Output (Pens)	Nominal GDP
2017	280		7.00	600
2018	294	15		600

The money supply grew at a rate of ____ % from 2017 to 2018. Since pen output did not change from 2017 to 2018 and the velocity of money (a. increased, b. decreased, c. remained the same), the change in the money supply was reflected (a. entirely, b. partially) in changes in the price level. The inflation rate from 2017 to 2018 was ____%.

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 2017, the money supply was $280, the price of a pen was $7.00, and the economy produced 600 pens.
Fill in the missing values in the following table, selecting the answers closest to the values you calculate.
Price Level Quantity of Output
Quantity of Money
(Dollars)
280
294
Year
2017
2018
Velocity of Money
The money supply grew at a rate of
2018 was
15
(Dollars)
7.00
(Pens)
73
600
600
Nominal GDP
the change in the money supply was reflected
F
(Dollars)
from 2017 to 2018. Since pen output did not change from 2017 to 2018 and the velocity of money
in changes in the price level. The inflation rate from 2017 to

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