Suppose that this year's money supply is $500 billion, nominai GDP is $10 trilion, and real GOP is $5 trilion. The price level is ). and the velocity of money is Suppose that velocity is constant and the economy's output of goods and services rises by 4 percent each year. Use this information to answer the questions that follow. ar the Fed keeps the money supply constant, the price level will and nominal GDP will True or False: If the Fed wants to keep the price level stable instead, it should decrease the money supply by 4% next year. O true O False Ir the Fed wants an inflation rate of 10 percent instead, it should the money supply by -(Hint: The quantity equation can be rewritten as the following percentage change formula: (Percentoge Chunge in M) +(Percentage Change in V) = (Percetage Change in P) + (Percentage Change in Y).)

Suppose that this year's money supply is $500 billion, nominai GDP is $10 trilion, and real GOP is $5 trilion. The price level is ). and the velocity of money is Suppose that velocity is constant and the economy's output of goods and services rises by 4 percent each year. Use this information to answer the questions that follow. ar the Fed keeps the money supply constant, the price level will and nominal GDP will True or False: If the Fed wants to keep the price level stable instead, it should decrease the money supply by 4% next year. O true O False Ir the Fed wants an inflation rate of 10 percent instead, it should the money supply by -(Hint: The quantity equation can be rewritten as the following percentage change formula: (Percentoge Chunge in M) +(Percentage Change in V) = (Percetage Change in P) + (Percentage Change in Y).)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In the country of Juventus, the money supply is equal to $52 (bilion), the velocity of circulation is 5, and real GDP is $100 (bilion) a. What is the price level in Juventus, and what is the valur of its nominal GDP? Round your price level to 2 decimal places Price level Nominal GDP b. If money supply increases by 20 percent, what will be the new values of the price level and nominal GDP, assuming that Vand real GDP remain constant? Round your price level to 2 decmal olaces Price levet Nominal GDP c What does this suggest about the connection between money supply atnd price level? The relationship between money supply and price level in this case is Cick to select)
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The misperceptions theory concludes that: O A. in the short run, unanticipated monetary changes are neutral but anticipated monetary changes are not neutral, B. in the short run, both anticipated and unanticipated monetary changes are not neutral. Oc. unanticipated monetary changes are not neutral in either the short run or the long run. O D. in the short run, anticipated monetary changes are neutral but unanticipated monetary changes are not neutral.