Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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B9
![Macmillan Learning
Inflation Work It Out: Question 2
Consider an economy with the money demand function is
Round answers to two places after the decimal when necessary.
a. Identify the correct expression for the velocity of money.
Ov=xi
Ov=xi
Ov=5y xi
Ov=5xi
b. Calculate velocity if the nominal interest rate (i) is 4 percent.
Velocity = 20
c. Assume output (Y) is 5000 units and the money supply (M) is $500. Calculate the price level (P).
Price level =](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb7669f31-108a-4b2b-bdec-c1a471bbec2c%2Fa14c6b72-882d-4832-bd61-9a852ade4783%2Fuc95o9j_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Macmillan Learning
Inflation Work It Out: Question 2
Consider an economy with the money demand function is
Round answers to two places after the decimal when necessary.
a. Identify the correct expression for the velocity of money.
Ov=xi
Ov=xi
Ov=5y xi
Ov=5xi
b. Calculate velocity if the nominal interest rate (i) is 4 percent.
Velocity = 20
c. Assume output (Y) is 5000 units and the money supply (M) is $500. Calculate the price level (P).
Price level =
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