[The following scenario applies to the next two questions.] In 20X2, real GDP = 783, the price level = 114, and the nominal wage rate= 35.48 / hour In 20X3, real GDP = 816, the price level = 161, and the nominal wage rate= 42.39 / hour The real interest rate, inflation rate, and bank transaction costs do not change, and the real demand for money is proportional to real GDP. Question 1.8: Nominal money supply What is the percentage change in the nominal money supply from 20X2 to 20X3? A. 42.93% B. 44.35% C. 45.76% D. 47.18% E. 48.60% Question 1.9: Marginal product of labor What is the percentage change in the marginal product of labor from 20X2 to 20X3? A. -15.40% B. -15.86% C. -16.33% D. -16.79% E. -17.25%

[The following scenario applies to the next two questions.] In 20X2, real GDP = 783, the price level = 114, and the nominal wage rate= 35.48 / hour In 20X3, real GDP = 816, the price level = 161, and the nominal wage rate= 42.39 / hour The real interest rate, inflation rate, and bank transaction costs do not change, and the real demand for money is proportional to real GDP. Question 1.8: Nominal money supply What is the percentage change in the nominal money supply from 20X2 to 20X3? A. 42.93% B. 44.35% C. 45.76% D. 47.18% E. 48.60% Question 1.9: Marginal product of labor What is the percentage change in the marginal product of labor from 20X2 to 20X3? A. -15.40% B. -15.86% C. -16.33% D. -16.79% E. -17.25%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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According to the transmission mechanism of money,a. For constant output, if the real money supply exceeds the real quantity of money demanded, what will happen to the real interest rate that clears the asset market? (In describing the adjustment of the real interest rate, use the relationship that exists between the price of a non-monetary asset and the interest rate that it pays). Is money effective? (Does the change in nominal money supply cause real output to change?). Explain with details.
These are true or false. Need help with both please. The basic quantity equation of money is MV = PQ, where M is the money supply, V is the velocity of money, P is the price level, and Q is the real output of the economy. (I got false on this one, but I have a feeling that the answer should be true). The data show that the velocity of M1 is unchanging, which is one reason for why there is very little uncertainty as to the effects of monetary policy. (I got true on this one, but I am not 100% sure).
According to the quantity theory of money, if the supply of money and the velocity of money are held constant, the price level can only increase if output (Click to select) ♥ (Click to select) stays constant increases decreases
Given the equation of exchange set forth by the quantity theory of money (M×V=P×Q)(M×V=P×Q) , where MM is the supply of money, VV is the velocity of money, PP is the price level, and QQ is real output, which of the statements best defines PP? The total amount of currency, coins, and banking sector. The average of level of prices for a given basket of goods. The average number of times a dollar is spent in a given period of time. The quantity of goods and services produced within an econony.
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Suppose that velocity of money is constant, the expected inflation rate is always equal to the actual inflation rate, and the expected real interest rate is 3%. Answer the following questions. Justify your answers. -When the growth rate of the money supply is 8% and the growth rate of real GDP is 2%, what is the nominal interest rate?
According to the Quantity Theory of Money there is a direct relationship between money supply and inflation. In no more than 75 words, provide a brief and clear explanation of the precise quantitative nature of such a relationship.
An economy is at full employment and real GDP is $1,000 billion. The inflation rate is 3.0 percent a year, the price level is 1.2, and the velocity of circulation is 8.0. What is the quantity of money? The quantity of money is _____ billion
The Quantity Theory of Money (QTM) states that ______. Note: the blank represents an entire phrase, not one word. (a) In the long run, an increase in the money supply will generate an equivalent increase in the velocity of money. (b) In the long run, an increase in the money supply will generate an equivalent increase in real GDP. (c) In the long run, an increase in the velocity of money will generate an equivalent increase in the price level. (d) In the long run, an increase in the money supply will generate an equivalent increase in the price level.
Answer to 2 decimal digits
Money velocity in the country of Ecoland is always stable. In 2019 (the base year), the money supply was $250 billion. In 2020, the money supply increased to $350 billion, the price level increased by 25 percent, and nominal GDP equaled $1400 billion. By how much did real GDP increase between 2019 and 2020? A) $15 billion B) $ 50 billion C) $12.5 billion D) $150 billion
The quantity equation, also known as the equation of exchange, shows that the product of the money supply (M) and the velocity of money (V) is equal to the product of the price level (P) and real GDP (Q): Mx V = PxQ. Observe that when the left-hand side of the quantity equation, Mx V, changes by a given percentage, the right-hand side, P x Q, must change by the same percentage: Percentage Change in (Mx V) = = You can use the rule that the percentage change in the product of two variables is approximately equal to the sum of the percentage changes in each of the variables (as long as the percentage changes are fairly small) to further analyze changes in the variables of the quantity equation. In the following equation, let "%A" stand for "percentage change in": %AM+%AV = = Percentage Change in (PxQ) %AP+%AQ For example, if you know that the money supply grows at a rate of 8% per year, velocity grows at a rate of 1% per year, and real GDP grows at a rate of 5% per year, you can use this…