Consider Tralfamadore, a hypothetical country that produces only burritos. In 2018, a burrito is priced at $4.00. Complete the first row of the table with the quantity of burritos that can be bought with $300. Hint: In this problem, assume it is not possible to buy a fraction of a burrito, and always round down to the nearest whole burrito. For example, if your calculations result in 1.5 burritos, the answer should be 1 burrito. Year 2018 2019 Price of a Burrito (Dollars) 4.00 Burritos Bought with $300 (Quantity) Suppose the government of Tralfamadore cannot raise sufficient tax revenue to pay its debts. In order to meet its de prints money. As a result, the money supply rises by 20% by 2019. Assuming monetary neutrality bought with $300 in 2019. complete Irow of the table with the price of a Fisher effect classical dichotomy and the ne velocity of money The impact of the government's decision to raise revenue by printing money on the value of money is known as the inflation tax vernment t can be

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Using money creation to pay for government spending
F2
10. Using money creation to pay for government spending
Consider Tralfamadore, a hypothetical country that produces only burritos. In 2018, a burrito is priced at $4.00.
Complete the first row of the table with the quantity of burritos that can be bought with $300.
Hint: In this problem, assume it is not possible to buy a fraction of a burrito, and always round down to the nearest whole burrito. For example, if
your calculations result in 1.5 burritos, the answer should be 1 burrito.
Year
2018
2019
Price of a Burrito
(Dollars)
4.00
Suppose the government of Tralfamadore cannot raise sufficient tax revenue to pay its debts. In order to meet its de
prints money. As a result, the money supply rises by 20% by 2019.
#
classical dichotomy
Assuming monetary neutrality holds, complete the second row of the table with the new price of a burrito and the ne velocity of money
bought with $300 in 2019.
The impact of the government's decision to raise revenue by printing money on the value of money is known as the
3
80
Burritos Bought with $300
(Quantity)
F3
4
9
F4
%
5
9
F5
A
6
MacBook Air
C
F6
&
7
F7
*
8
DII
F8
Fisher effect
(
9
inflation tax
F9
0
vernment
that can be
F10
a
F11
+
F12
Transcribed Image Text:F2 10. Using money creation to pay for government spending Consider Tralfamadore, a hypothetical country that produces only burritos. In 2018, a burrito is priced at $4.00. Complete the first row of the table with the quantity of burritos that can be bought with $300. Hint: In this problem, assume it is not possible to buy a fraction of a burrito, and always round down to the nearest whole burrito. For example, if your calculations result in 1.5 burritos, the answer should be 1 burrito. Year 2018 2019 Price of a Burrito (Dollars) 4.00 Suppose the government of Tralfamadore cannot raise sufficient tax revenue to pay its debts. In order to meet its de prints money. As a result, the money supply rises by 20% by 2019. # classical dichotomy Assuming monetary neutrality holds, complete the second row of the table with the new price of a burrito and the ne velocity of money bought with $300 in 2019. The impact of the government's decision to raise revenue by printing money on the value of money is known as the 3 80 Burritos Bought with $300 (Quantity) F3 4 9 F4 % 5 9 F5 A 6 MacBook Air C F6 & 7 F7 * 8 DII F8 Fisher effect ( 9 inflation tax F9 0 vernment that can be F10 a F11 + F12
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