Suppose you have the following monetary asset information: Cash in circulation: $300b Demand deposits: $400b Traveler’s checks: $50b Saving accounts: $2000b Money Market Mutual Funds: $1000b Short term time deposits: $500b a. Calculate M1 and M2. b. Recall that the quantity theory of money states that MV = PT. If the velocity of money is presumed fairly constant, how is it helpful to measure the money supply (whether M1 and M2) for purposes of predicting inflation?

Q: Consider an economy in which the demand for money is of the formMt =(1/v) PtY        for t = 0, 1,…

A: To determine why the inflation rates differ in the two situations.

Q: Give exact answer without photo answer and take a like

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A: * ANSWER :-  *(2)

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A: Given:Initial price level=$4New price level=$4.4Change in price level=4.4-4=$4

Q: Suppose that initially the money supply is $2 trillion, the price level equals 4, the real GDP is S6…

A: a. By using quantity theory of money  M×V = P×Y  Original equation is  2×12 = 4×6

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A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

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