Suppose the liquidity preference function is given by: Y - 1,000i 10 L(i,Y) = Calculate velocity for each period, using the money demand equation: V= L(i,Y) along with the following table of values. (Round your responses to two decimal places.) Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Y (in billions) 12,200 12,500 12,450 12,500 12,900 13,000 13,300 Interest rate 0.05 0.06 0.03 0.06 0.07 0.03 0.08 Velocity

Suppose the liquidity preference function is given by: Y - 1,000i 10 L(i,Y) = Calculate velocity for each period, using the money demand equation: V= L(i,Y) along with the following table of values. (Round your responses to two decimal places.) Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Y (in billions) 12,200 12,500 12,450 12,500 12,900 13,000 13,300 Interest rate 0.05 0.06 0.03 0.06 0.07 0.03 0.08 Velocity

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the money supply is growing at a rate of 10 percent per year, real GDP (real output) is growing at a rate of 0 percent per year, and velocity is constant, what will the inflation rate be? %. (Enter your response as an integer value.) If the money supply is growing at a rate of 10 percent per year, real GDP (real output) is growing at a rate of 0 percent per year, and velocity is growing at 2 percent per year instead of remaining constant, what will the inflation rate be? %. (Enter your response as an integer value.)
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Suppose the money demand function is Md/P = 1000+ 0.2Y - 1000 (r + π²). and Y = 2000, r = .06, π = .04, and Ms is 2600. Suppose the real interest rate rises to 0.11, and expected inflation rises to 0.09, but Y and Ms are unchanged. What would the inflation rate be? Select one: a. 4% b. 10% O c. 6% d. 8%
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