Q1. In 2019, an economy produces wheat only and has enough labor, capital, and land to produce 500 bushels of wheat (Y or real GDP). Price of wheat and money supply are $2 per bushel and $1,000 respectively. In 2020, the central bank increases money supply by $ 1040. Suppose both the velocity of money (V) and the amount of wheat produced remain unchanged. a. Compute the velocity of money and nominal GDP in 2019. b. Calculate inflation rate in year 2020.
Q: What goods and services—and how much of each—will be produced?
A: In a nutshell, an economy must distribute its resources and pick between several possible bundles of…
Q: What is meant by the following (the elements of the economic problem can be analyzed into two main…
A: Scarcity: - it is a very basic problem of economics that is related to the limited availability of…
Q: XERCISE-3 EPRECIATION AND DEPLETION A tractor costs P800,000 and whose salvage value is P40,000…
A: Rate of depreciation =100/10=10% 1st year depreciation =800,000*10%=80,000 2nd year depreciation…
Q: the value equation is a ratio between benefits and price per product. Whithout knowing the Farmers…
A: Benefit-Cost Analysis is a procedure that found the prospective risk deduction advantages of a…
Q: (Figure: The Demand for Winter Gloves) Use Figure: The Demand for Winter Gloves. The price…
A: Elasticity measures the responsiveness of quantity demanded to changes in price level.
Q: ✓ How does inflation affect the prices you pay for goods and services?
A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…
Q: (d) u2(x) and u3(x) are related. How? [Hint: take the limit of u2(x) as p → 1 by using l'Hopital's…
A: In economics, utility functions are defined as the individual preferences for commodities apart from…
Q: In a representative Real Business Cycle model, with capital stock in period t+1 defined by SK
A: Effective investment refers to the net addition to the capital stock of economy which is measured by…
Q: Give 5 examples of ways in which globalization through trade has promoted interdependence among…
A: Trade is defined as the exchange of commodities and services across the boundary of the country.…
Q: Suppose that GDP is $8 billion, taxes are $1.5 billion, private saving is $0.5 billion, and public…
A: In a closed economy, GDP is the sum of consumption expenditure, investment spending, government…
Q: Monetarists believe that increases in the money supply cause inflation. The most important…
A: Monetarism puts light on the role of government in controlling the circulation of money. The oldest…
Q: 1. These are factors affecting the demand to increase and decrease, EXCEPT one. A. Raw materials…
A: Demand is the quantity that a consume are willing to buy at certain time and place . Genrally ,…
Q: The per-week (inverse) demand for use of the Øresund Bridge between Denmark and Sweden is P = 13 −…
A: Given: The inverse demand function between Denmark and Sweden is P = 13 − 0.15Q During peak traffic…
Q: Draw the graph. If the monopoly is a single price monopoly then: the monopoly produces a quantity Q…
A: 1. The monopoly produces a quantity 3, where MC=MR
Q: Which of the following is correct as an interpretation of the Keynesian consumption function? None…
A: Keynes Consumption function: C = c + MPC * Yd => C = c + MPC * (Y-T) Where C -> consumption c…
Q: 2. Suppose you asked the following question to Person A and Person B: "How much are you willing to…
A: Introduction Here wealth of A and B is $100. Suppose CARA utility function for A is U ( A) = 2…
Q: 1a True or false question. This is an econometrics question. Please provide an explanation 1a…
A: 1a ANSWER:TRUE EXPLANATION:Given that the problem with the use of a logged dependent variable as an…
Q: . The estimated useful life of the concrete building is 60 years with no nee ir cost for the first…
A: *Answer: Service life of RCC building = 60years Service life of steel building = 20years
Q: What is the general statement regarding the price determination and how Demand and supply only…
A:
Q: Difference between the Partial equilibrium Approach and the general equilibrium Approach? Show their…
A:
Q: The HAC at Humberview has decided to sell Gatorade to raise money. The demand function is described…
A: Profit is maximized where marginal revenue equal to marginal cost.
Q: 100 SMC ATC 65 50 MR 500 1000 The whole point of being a monopolist is to earn positive economic…
A: Monopolist is a single seller in the market, selling unique good with no close substitutes.
Q: If an investment has a nominal return of 3.8% per year, while the inflation is expected to be 3.6%…
A: Real return is the interest rate adjusted for inflation. Nominal return does not account for price…
Q: Completed as soon as possible thank u Suppose there is a firm with at least some market power that…
A: The price elasticity of demand refers to a change in the quantity demanded due to a change in the…
Q: According to Degree of Integration (Give the definition of each and Examples) Customs Union
A: International trade refers to the free movement of goods and services, jobs, capital, technology,…
Q: Changing a regulation may require focusing on different targets depending on the stage of…
A: Changing a regulation may require focusing on different targets depending on the stage of the…
Q: In case of a competitive Piv m, where the Cost fuction is $C(9) =2K*r*9% 10 3. By MaXinizing the…
A: Given: C(q) = 2r11/2r21/2q3/2 TR = pq - c(q)
Q: Consider the following production function for shirts: q = v6 L3/4K1/4, where L is worker-hours, and…
A: Marginal product is the additional output produced by employing an additional unit of input. There…
Q: First cost of a passenger bus is ₽800,000. Its estimated life is 4 years with no salvage value. The…
A: Annual values is uniformly equal AW of all computed income and costs during the duration of a…
Q: 2. Complete the demand schedule below for the given equation Qd 750 -10P at given prices P12.00,…
A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
Q: Company Blackmores Analyse and discuss the key legal and regulatory, financial, operational and…
A: Blackmores is the top natural health firm in Australia. Among the many reasons Blackmores is the…
Q: Gaynor is the only manufacturer of gas pumps that automatically refill. Gaynor can earn a profit on…
A: In a competitive market firms can earn positive profit in short run but will earn zero economic…
Q: MC ATC 10 20 30 40 50 60 70 80 Quantity mat is the result for this perfectly competitive firm when…
A: A perfectly competitive firm produces at P=MC in the short run, i.e., the intersection point of the…
Q: Consider the following types of firms. For each one, the long-run average cost curve eventually…
A: The expenses that are being incurred for carrying out transactions of the business are known as…
Q: A manufacturer produces a certain product at a labor cost of P 315 per unit, material cost of P 100…
A: Here, given information is: Per unit labor cost: P315 Per unit material cost: P100 Per unit…
Q: If two persons are trading in two different categories, he would get best output from one and a…
A: Trade refers to a core economic concept that is basically the buying and selling of commodities and…
Q: What equation shows the relationship of MC to AVC when AVC is rising?
A: Marginal Cost It refers to the change in the total cost due to one unit change in output. Variable…
Q: How the time affects supply, perishable Goods and how it affects the reproducible goods?
A:
Q: Suppose the price of Cheerios rises by 25%, and the quantity of milk sold decreases by 50%. We know…
A: Cross price elasticity of demand measures the responsiveness of quantity demanded of good 1 with…
Q: each of the following cases, calculate the values of MPC, decimal places. PW, and the spending…
A: In economics, the marginal propensity to consume (MPC) is defined as the proportion of an aggregate…
Q: An untreated wooden pole that will last 10 years under a certain soil condition costs P 12,000. If…
A: Cost of untreated wooden pole = P12000 Treated pole last = 20 years Interest rate = 12% Tax = 1%
Q: hand written asap
A: Cost is the expenditure that is incurred in the production of goods and services in an economy. The…
Q: _______ A study of how wealth is created and distributed.
A: Economics is a social science which studies the functioning of an economy. It can be divided into…
Q: It is possible for a monopolist's to earn economic profits even in the long run due to: a. its…
A: Monopoly is a market arrangement in which there is only one vendor of a good with complete market…
Q: According to the economic quality level model, the pursuit of higher levels of quality will result…
A: Introduction Its answer is true because when the level of quantity is higher then it will decrease…
Q: ._______ The government spends more than it receives.
A: Taxes are unintended fees placed on individuals or companies and levied by a government agency –…
Q: Consider the two-period Neoclassical growth model seen in class. Suppose that income is measured in…
A: The neoclassical growth theory is based on the confluence of three driving forces—labour, capital,…
Q: Explain the concept of supply curve? Show the relationship between the Short run supply curve and…
A:
Q: In the short run, the equilibrium price received by the vegetable farmers (operating in a perfectly…
A: The markets are the place where the buyers and the sellers of various goods and services tend to…
Q: What is the Importance of Time element and how time element is determined with Market price? Show…
A:
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- In 2019, an economy produces wheat only and has enough labor, capital, and land to produce 500bushels of wheat (Y or real GDP). Price of wheat and money supply are $2 per bushel and $1,000respectively. In 2020, the central bank increases money supply by $ 1040. Suppose both the velocity ofmoney (V) and the amount of wheat produced remain unchanged. a. Compute the velocity of money and nominal GDP in 2019. b. Calculate inflation rate in year 2020. c. Use a well-labelled money supply-demand diagram to illustrate and explain what happen to the pricelevel and the value of money after such money injection?In the country Constantania, suppose the velocity of money is always the same. Last year, the money supply was $2 billion and real GDP was $5 billion. This year, the money supply increased by 6 percent, real GDP by 4 percent, and nominal GDP is $6.5 billion. a) Calculate the velocity of money and the price levels in the two years, and then calculate the inflation rate. b) Calculate the inflation rate using the formula AM/M + AV/V = AP/P + AY/Y, where the Greek letter A represents a change and the ratio AM/Mx 100 is the percentage change (or the rate of change) in M. Compare this result with the result you obtained in part a. Why could there be some difference? c) What is the difference between commodity money and fiat money? Why do people accept fiat currency in trade for goods and services?The U.S. Federal Reserve responded to the 2020 COVID-19 lockdowns by implementing an expansionary monetary policy, causing the M2 money supply to rise from$15.3trillion in December 2019 to$18.3 trillion in July 2020. Over the same period, real GDP fell by 5.1 percent. (a) Assuming that the velocity of money was constant over this period, what should the inflation rate be, based on the quantity equation? Show your work. (b) Why would you not expect inflation to be immediate, following the Fed’s monetary expansion?
- If nominal GDP in an economy is $1500 and the money supply is $500, what is the velocity of money? a. 333 b. 5 c. 3 d. 75003 Money demand function · Suppose a country has a money demand function: M. 0.5Y i a) Is velocity a constant value? If not, please derive the expression for velocity of money. b) Now assume the interest rate is 2.5%, calculate the velocity.11. Assume that in an economy the total money supply, Ms, is SR100; the quantity of output, Q, is 50 units of a good; and the average price, P, of this output is SR10 per unit. Calculate the income velocity of money.
- 1. Nominal GDP =P*Y, where P is the price level and Y is aggregate output (income) . We know from class slides that the velocity of money links money supply and nominal GDP. Given nominal GDP in a year is $10 trillion and the quantity of money (M1) is $2 trillion, what is the velocity? What is the meaning of this calculated velocity? 2. Suppose that real money demand is represented by the equation M“/P= 0.25×Y. Calculate the velocity of money. 3. Consider a five year $1000 semiannual coupon bond with a 5% coupon rate. If the bond is current trading for a price of $957.35, what is the bond's yield to maturity? If the bond's yield to maturity increase a little bit, what will the bond's price be? 4. Suppose a 7-year, $1,000 bond with an 8% coupon rate and semiannual coupons is trading with a yield to maturity of 6.75%. Is this bond currently trading at a discount, at par, or at a premium? Explain. If the yield to maturity of the bond rises to 7%, what price will the bond trade for? 5.…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 was4. Velocity and the quantity equation Consider a simple economy that produces only jean jackets. The following table contains information on the economy's money supply, velocity of money, price level, and output. For example, in 2021, the money supply was $400, the price of a jean jacket was $5.00, and the economy produced 800 jean jackets. Fill in the missing values in the following table, selecting the answers closest to the values you calculate. Quantity of Money Price Level (Dollars) (Dollars) 400 5.00 412 Year 2021 2022 Velocity of Money 10 The money supply grew at a rate of money 2021 to 2022 was 10 5.15 Quantity of Output (Jean jackets) 800 800 Nominal GDP (Dollars) 4,000.00 4,120.00 from 2021 to 2022. Since jean jacket output did not change from 2021 to 2022 and the velocity of the change in the money supply was reflected in changes in the price level. The inflation rate from
- 24. If the economy is at potential output, and the Fed increases the money supply, in the short run, the likely result will be a(n) _____ in investment and a(n) _____ in consumer spending. increase; decrease decrease; increase increase; increase decrease; decrease 26. Suppose that a typical basket of goods is now less expensive than it used to be. All else equal, we would expect: the demand curve for money to shift outward. a downward movement along a fixed money demand curve. the demand curve for money to shift inward. an upward movement along a fixed money demand curve.a Imagine an economy has the following situation: Velocity of money (V) is constant, Nominal Money Supply (M) growth is 8%, Output (Y) growth is 4% and real interest rate (r) is 4%. Calculate the following: i. Nominal interest rate (i) ii. If State Bank of Pakistan (SBP) increases the money growth rate by 2 percent point per year, find Δi? iii. If the growth rate of Y decreases to 2% per annum, what will happen to the inflation rate (π)?1. Inflation can cause increased wealth inequality through the Cantillion Effect. Essentially, this means that expansionary monetary policy benefits those who are initially given new money (usually those who are rich and well-connected), while the rest of the population suffers the effects of inflation. Using the quantity theory of money, explain why this is the case.case. 2. Assume that the economy has an annual inflation rate of 5 percent. Are the following investments profitable in real terms? You do not need to explain your answert. (a) The spot price of silver is $31 per ounce. You purchase 50 ounces of silver for $1,600, in order to compensate the merchant. Over the year, the spot price of silver rises to $34 per ounce, and you are able to sell the silver you have at the spot price. (b) You purchase a Non-Fungible Token (NFT) for $98 million. The following year, you are able to sell it for $102.5 million 3. Why does the 'inflation tax' transfer resources from working people to…