Give exact answer without photo answer and take a like Suppose that in year 2023, money supply (MS) is $ 800 billion, price level is $100 trillion, and real GDP (Y1) is$3 trillion. And expected real GDP of next year (Y2) is $3.18 trillion.1. What is the velocity of money, V? (1 mark)2. Suppose that velocity is constant. What will happen to the price level next year if the central bankkeeps the money supply constant? (1 mark)3.4.You are also told that the central bank is planning to set money supply growth at 10%, indefinitely.Find the new real GDP (Y3) next year so that the central bank keeps the inflation rate at 2%? (2 marks)Now suppose that the central bank decided to expand the money supply at the same rate of 10% peryear, indefinitely. Explain what will happen to the level of interest rate, inflation rate, andunemployment rate? (2 marks)

1. Velocity of Money (V)We can rearrange the equation to solve for V:V = PY / MSubstituting the…

Answered: Suppose that in year 2023, money supply…

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter15: Monetary Theory And Policy

Section: Chapter Questions

Problem 3.6P

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Suppose the money demand function is ▪ Md/P = 1000+ 0.2Y - 1000 (r + πе). (a) Calculate velocity if Y = 2000, r = .06, and Te = .04. (b) If the money supply (Ms) is 2600, what is the price level? "(c) Now suppose the real interest rate rises to 0.11, but and Ms are unchanged. What happens to velocity, and the price level? So if the hominal interest rate were to rise from 0.10 to 0.15 over the course of a year, with Y remaining at 2000, what would the inflation rate be?
2. Suppose that in the U.S., the income velocity of money (V) is constant. Suppose, too, that every year, real GDP grows by 2.5 percent (%ΔY/year = 0.025) and the supply of money grows by 10 percent (%ΔM/year = 0.10). a. According to the Quantity Theory of Money, what would be the growth rate of nominal GDP = P×Y? Hint: %Δ(X×Y)  %ΔX + %ΔY.
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.…
2. What “backs" the money supply in the United States? What determines the value (domestic purchasing power) of money? How does the purchasing power of money relate to the price level? Who in the United States is responsible for maintaining money's purchasing power? There is ( no, some ) concrete backing to the money supply in the United States. Paper money, which has ( some, no ) intrinsic value, has value only because people are willing to accept it in exchange for goods and services, including their labor services as employees. And people are willing to accept paper as money because they know that everyone else is also willing to do so. If the monetary authorities were issuing new banknotes at a rate far in excess of available output, the acceptability of paper money would (increase, diminish ). People would start to worry about whether the banknotes would be worth much after they received them. Checks are part of the money supply and ( are, are not) legal tender, but people accept…
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Suppose that this year's money supply is $1,200 billion, nominal GDP is $6,000 billion and real GDP is $5,000 billion. (This question concerns the Equation of Exchange in the Classical Quantity Theory of Money). a) What is the price level (expressed as a percentage-i.e., as a price index)? b) What is the velocity of money? c) Suppose that velocity is constant and the economy's output of goods and services rises by 6 percent each year. If the Fed keeps the money supply constant, what will nominal GDP be next year? d) Under the conditions in c) what will happen to the price level next year? e) What money supply should the Fed set next year if it wants to keep the price level stable? 1) What money supply should the Fed set next year if it wants the inflation rate to be 8 percent?
According to the quantity theory of money, if in a year's time, real GDP grew from $10 trillion to $10.2 trillion, and nominal GDP for the same time period grew from $10 trillion to $10.5 trillion, then ____________. (Check all that apply) A. the growth rate of inflation is 3 percent. B. the growth rate of the money supply is 5 percent. C. the growth rate of inflation is 5 percent. D. the growth rate of the money supply is 3 percent. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
i need the answer quickly
If inflation is 5%, the real growth rate is 3%, and the change in velocity is 2%, then the increase in the money supply is _____
Q47 Which of the following is the definition for the real supply of money? Select one: a. the actual quantity of money, rather than the officially reported quantity. b. the stock of high powered money only. c. the ratio of the real GDP to the nominal money supply. d. the stock of money measured in terms of goods, not dollars.
4. Suppose demand for real money balance is 500 + 0.2Y –1000i. P If P = 10, Y= 1000, and I= 0.10, and the money market is in equilibrium, What is the equilibrium stock of nominal money? b. What is the velocity of money? Suppose there is an autonomous increase in money demand by 100, with a constant nominal money supply, P = 10, and Y= 1000, what is the equilibrium i? d. If the central bank wishes to maintain i = 0.10, what must the nominal money supply be? Draw and label completely a money market equilibrium diagram. Label equilibrium M/P and i with their actual values. Draw and carefully label the changes that result from (c) and (d) above. а. c. е.
Can you solve for d) please and thanks

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