The inflation in the economy.

Question

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Answer 1

Question

Chapter 16, Problem 1FT

Sub part (a):

To determine

The inflation in the economy.

Sub part (a):

Expert Solution

Answer to Problem 1FT

The inflation is 9 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money is 3 percent and the real growth in the economy is 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the summation of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(10+3)−4=9

Thus, the inflation in the economy is 9 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (b):

To determine

The inflation and the real growth in the economy.

Sub part (b):

Expert Solution

Answer to Problem 1FT

The inflation is 6 percent and real growth rate is 4 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money falls to 0 percent. The real growth in the economy is unchanged and thus, it will remain as 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=10−4=6

Thus, the inflation in the economy is 6 percent and the real growth rate is 4 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (c):

To determine

The inflation in the economy of Pre.

Sub part (c):

Expert Solution

Answer to Problem 1FT

The inflation is 4 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. It is also given that the velocity of money increases by 4 percent. The real growth in the economy is given to be 2 percent.

Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the sum of the increase in the money supply and the velocity of money as follows:

Inflation=(Increase in money supply+Velocity of money)−Real growth rate=(2+4)−2=4

Thus, the inflation in the economy is 4 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (d):

To determine

The inflation and the real growth in the economy of Pre.

Sub part (d):

Expert Solution

Answer to Problem 1FT

The inflation is 8 percent and real growth rate is 2 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. Here, there is a change in the velocity of money. The velocity of money increases by 8 percent.

The changes in the velocity of money do not affect the real growth in the economy. Thus, the real growth rate is unchanged and it will remain same as 2 percent. Therefore, the inflation in the economy can be calculated by subtracting the real growth rate from sum of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(2+8)−2=8

Thus, the inflation in the economy is 8 percent and the real growth rate is 2 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (e):

To determine

The inflation in the economy of Fri.

Sub part (e):

Expert Solution

Answer to Problem 1FT

Inflation is 0 percent.

Explanation of Solution

The money supply growth rate in the economy is given to be 3 percent. whereas the velocity of money is given as 0 percent. The real growth rate of the economy is given to be 3 percent. Thus, the inflation rate in the economy can be calculated as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(3+0)−3=0

Thus, the inflation in the economy is 0 percent and it is the rate of inflation which is best according to Milton Friedman.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (f):

To determine

The inflation and the real growth in the economy of Fri.

Sub part (f):

Expert Solution

Answer to Problem 1FT

The inflation is -2 percent and real growth rate is 3 percent.

Explanation of Solution

It is given that the money supply in the economy increases by only 1 percent. It is also given that the velocity of money is 0 percent. The real growth in the economy is unchanged and thus, it will remain as 3 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=1−3=−2

Thus, the inflation in the economy is -2 percent and the real growth rate is 3 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

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Answer 2

Question

Chapter 16, Problem 1FT

Sub part (a):

To determine

The inflation in the economy.

Sub part (a):

Expert Solution

Answer to Problem 1FT

The inflation is 9 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money is 3 percent and the real growth in the economy is 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the summation of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(10+3)−4=9

Thus, the inflation in the economy is 9 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (b):

To determine

The inflation and the real growth in the economy.

Sub part (b):

Expert Solution

Answer to Problem 1FT

The inflation is 6 percent and real growth rate is 4 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money falls to 0 percent. The real growth in the economy is unchanged and thus, it will remain as 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=10−4=6

Thus, the inflation in the economy is 6 percent and the real growth rate is 4 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (c):

To determine

The inflation in the economy of Pre.

Sub part (c):

Expert Solution

Answer to Problem 1FT

The inflation is 4 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. It is also given that the velocity of money increases by 4 percent. The real growth in the economy is given to be 2 percent.

Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the sum of the increase in the money supply and the velocity of money as follows:

Inflation=(Increase in money supply+Velocity of money)−Real growth rate=(2+4)−2=4

Thus, the inflation in the economy is 4 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (d):

To determine

The inflation and the real growth in the economy of Pre.

Sub part (d):

Expert Solution

Answer to Problem 1FT

The inflation is 8 percent and real growth rate is 2 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. Here, there is a change in the velocity of money. The velocity of money increases by 8 percent.

The changes in the velocity of money do not affect the real growth in the economy. Thus, the real growth rate is unchanged and it will remain same as 2 percent. Therefore, the inflation in the economy can be calculated by subtracting the real growth rate from sum of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(2+8)−2=8

Thus, the inflation in the economy is 8 percent and the real growth rate is 2 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (e):

To determine

The inflation in the economy of Fri.

Sub part (e):

Expert Solution

Answer to Problem 1FT

Inflation is 0 percent.

Explanation of Solution

The money supply growth rate in the economy is given to be 3 percent. whereas the velocity of money is given as 0 percent. The real growth rate of the economy is given to be 3 percent. Thus, the inflation rate in the economy can be calculated as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(3+0)−3=0

Thus, the inflation in the economy is 0 percent and it is the rate of inflation which is best according to Milton Friedman.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (f):

To determine

The inflation and the real growth in the economy of Fri.

Sub part (f):

Expert Solution

Answer to Problem 1FT

The inflation is -2 percent and real growth rate is 3 percent.

Explanation of Solution

It is given that the money supply in the economy increases by only 1 percent. It is also given that the velocity of money is 0 percent. The real growth in the economy is unchanged and thus, it will remain as 3 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=1−3=−2

Thus, the inflation in the economy is -2 percent and the real growth rate is 3 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

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Answer 3

Question

Chapter 16, Problem 1FT

Sub part (a):

To determine

The inflation in the economy.

Sub part (a):

Expert Solution

Answer to Problem 1FT

The inflation is 9 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money is 3 percent and the real growth in the economy is 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the summation of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(10+3)−4=9

Thus, the inflation in the economy is 9 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (b):

To determine

The inflation and the real growth in the economy.

Sub part (b):

Expert Solution

Answer to Problem 1FT

The inflation is 6 percent and real growth rate is 4 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money falls to 0 percent. The real growth in the economy is unchanged and thus, it will remain as 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=10−4=6

Thus, the inflation in the economy is 6 percent and the real growth rate is 4 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (c):

To determine

The inflation in the economy of Pre.

Sub part (c):

Expert Solution

Answer to Problem 1FT

The inflation is 4 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. It is also given that the velocity of money increases by 4 percent. The real growth in the economy is given to be 2 percent.

Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the sum of the increase in the money supply and the velocity of money as follows:

Inflation=(Increase in money supply+Velocity of money)−Real growth rate=(2+4)−2=4

Thus, the inflation in the economy is 4 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (d):

To determine

The inflation and the real growth in the economy of Pre.

Sub part (d):

Expert Solution

Answer to Problem 1FT

The inflation is 8 percent and real growth rate is 2 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. Here, there is a change in the velocity of money. The velocity of money increases by 8 percent.

The changes in the velocity of money do not affect the real growth in the economy. Thus, the real growth rate is unchanged and it will remain same as 2 percent. Therefore, the inflation in the economy can be calculated by subtracting the real growth rate from sum of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(2+8)−2=8

Thus, the inflation in the economy is 8 percent and the real growth rate is 2 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (e):

To determine

The inflation in the economy of Fri.

Sub part (e):

Expert Solution

Answer to Problem 1FT

Inflation is 0 percent.

Explanation of Solution

The money supply growth rate in the economy is given to be 3 percent. whereas the velocity of money is given as 0 percent. The real growth rate of the economy is given to be 3 percent. Thus, the inflation rate in the economy can be calculated as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(3+0)−3=0

Thus, the inflation in the economy is 0 percent and it is the rate of inflation which is best according to Milton Friedman.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (f):

To determine

The inflation and the real growth in the economy of Fri.

Sub part (f):

Expert Solution

Answer to Problem 1FT

The inflation is -2 percent and real growth rate is 3 percent.

Explanation of Solution

It is given that the money supply in the economy increases by only 1 percent. It is also given that the velocity of money is 0 percent. The real growth in the economy is unchanged and thus, it will remain as 3 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=1−3=−2

Thus, the inflation in the economy is -2 percent and the real growth rate is 3 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 16, Problem 1FT

Sub part (a):

To determine

The inflation in the economy.

Sub part (a):

Expert Solution

Answer to Problem 1FT

The inflation is 9 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money is 3 percent and the real growth in the economy is 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the summation of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(10+3)−4=9

Thus, the inflation in the economy is 9 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (b):

To determine

The inflation and the real growth in the economy.

Sub part (b):

Expert Solution

Answer to Problem 1FT

The inflation is 6 percent and real growth rate is 4 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money falls to 0 percent. The real growth in the economy is unchanged and thus, it will remain as 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=10−4=6

Thus, the inflation in the economy is 6 percent and the real growth rate is 4 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (c):

To determine

The inflation in the economy of Pre.

Sub part (c):

Expert Solution

Answer to Problem 1FT

The inflation is 4 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. It is also given that the velocity of money increases by 4 percent. The real growth in the economy is given to be 2 percent.

Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the sum of the increase in the money supply and the velocity of money as follows:

Inflation=(Increase in money supply+Velocity of money)−Real growth rate=(2+4)−2=4

Thus, the inflation in the economy is 4 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (d):

To determine

The inflation and the real growth in the economy of Pre.

Sub part (d):

Expert Solution

Answer to Problem 1FT

The inflation is 8 percent and real growth rate is 2 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. Here, there is a change in the velocity of money. The velocity of money increases by 8 percent.

The changes in the velocity of money do not affect the real growth in the economy. Thus, the real growth rate is unchanged and it will remain same as 2 percent. Therefore, the inflation in the economy can be calculated by subtracting the real growth rate from sum of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(2+8)−2=8

Thus, the inflation in the economy is 8 percent and the real growth rate is 2 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (e):

To determine

The inflation in the economy of Fri.

Sub part (e):

Expert Solution

Answer to Problem 1FT

Inflation is 0 percent.

Explanation of Solution

The money supply growth rate in the economy is given to be 3 percent. whereas the velocity of money is given as 0 percent. The real growth rate of the economy is given to be 3 percent. Thus, the inflation rate in the economy can be calculated as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(3+0)−3=0

Thus, the inflation in the economy is 0 percent and it is the rate of inflation which is best according to Milton Friedman.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (f):

To determine

The inflation and the real growth in the economy of Fri.

Sub part (f):

Expert Solution

Answer to Problem 1FT

The inflation is -2 percent and real growth rate is 3 percent.

Explanation of Solution

It is given that the money supply in the economy increases by only 1 percent. It is also given that the velocity of money is 0 percent. The real growth in the economy is unchanged and thus, it will remain as 3 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=1−3=−2

Thus, the inflation in the economy is -2 percent and the real growth rate is 3 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 16, Problem 1FT

Sub part (a):

To determine

The inflation in the economy.

Sub part (a):

Expert Solution

Answer to Problem 1FT

The inflation is 9 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money is 3 percent and the real growth in the economy is 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the summation of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(10+3)−4=9

Thus, the inflation in the economy is 9 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (b):

To determine

The inflation and the real growth in the economy.

Sub part (b):

Expert Solution

Answer to Problem 1FT

The inflation is 6 percent and real growth rate is 4 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money falls to 0 percent. The real growth in the economy is unchanged and thus, it will remain as 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=10−4=6

Thus, the inflation in the economy is 6 percent and the real growth rate is 4 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (c):

To determine

The inflation in the economy of Pre.

Sub part (c):

Expert Solution

Answer to Problem 1FT

The inflation is 4 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. It is also given that the velocity of money increases by 4 percent. The real growth in the economy is given to be 2 percent.

Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the sum of the increase in the money supply and the velocity of money as follows:

Inflation=(Increase in money supply+Velocity of money)−Real growth rate=(2+4)−2=4

Thus, the inflation in the economy is 4 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (d):

To determine

The inflation and the real growth in the economy of Pre.

Sub part (d):

Expert Solution

Answer to Problem 1FT

The inflation is 8 percent and real growth rate is 2 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. Here, there is a change in the velocity of money. The velocity of money increases by 8 percent.

The changes in the velocity of money do not affect the real growth in the economy. Thus, the real growth rate is unchanged and it will remain same as 2 percent. Therefore, the inflation in the economy can be calculated by subtracting the real growth rate from sum of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(2+8)−2=8

Thus, the inflation in the economy is 8 percent and the real growth rate is 2 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (e):

To determine

The inflation in the economy of Fri.

Sub part (e):

Expert Solution

Answer to Problem 1FT

Inflation is 0 percent.

Explanation of Solution

The money supply growth rate in the economy is given to be 3 percent. whereas the velocity of money is given as 0 percent. The real growth rate of the economy is given to be 3 percent. Thus, the inflation rate in the economy can be calculated as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(3+0)−3=0

Thus, the inflation in the economy is 0 percent and it is the rate of inflation which is best according to Milton Friedman.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Sub part (f):

To determine

The inflation and the real growth in the economy of Fri.

Sub part (f):

Expert Solution

Answer to Problem 1FT

The inflation is -2 percent and real growth rate is 3 percent.

Explanation of Solution

It is given that the money supply in the economy increases by only 1 percent. It is also given that the velocity of money is 0 percent. The real growth in the economy is unchanged and thus, it will remain as 3 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=1−3=−2

Thus, the inflation in the economy is -2 percent and the real growth rate is 3 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Answer 6

Chapter 16, Problem 1FT

Sub part (a):

To determine

The inflation in the economy.

Sub part (a):

Expert Solution

Answer to Problem 1FT

The inflation is 9 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money is 3 percent and the real growth in the economy is 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the summation of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(10+3)−4=9

Thus, the inflation in the economy is 9 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Answer 7

Chapter 16, Problem 1FT

Sub part (a):

To determine

The inflation in the economy.

Answer 8

Sub part (a):

Expert Solution

Answer to Problem 1FT

The inflation is 9 percent.

Answer 9

Sub part (a):

Expert Solution

Answer 10

Sub part (a):

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money is 3 percent and the real growth in the economy is 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the summation of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(10+3)−4=9

Thus, the inflation in the economy is 9 percent.

Answer 13

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Answer 14

Sub part (b):

To determine

The inflation and the real growth in the economy.

Sub part (b):

Expert Solution

Answer to Problem 1FT

The inflation is 6 percent and real growth rate is 4 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money falls to 0 percent. The real growth in the economy is unchanged and thus, it will remain as 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=10−4=6

Thus, the inflation in the economy is 6 percent and the real growth rate is 4 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Answer 15

Sub part (b):

To determine

The inflation and the real growth in the economy.

Answer 16

Sub part (b):

Expert Solution

Answer to Problem 1FT

The inflation is 6 percent and real growth rate is 4 percent.

Answer 17

Sub part (b):

Expert Solution

Answer 18

Sub part (b):

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

It is given that the money supply in the economy increases by 10 percent. It is also given that the velocity of money falls to 0 percent. The real growth in the economy is unchanged and thus, it will remain as 4 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=10−4=6

Thus, the inflation in the economy is 6 percent and the real growth rate is 4 percent.

Answer 21

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Answer 22

Sub part (c):

To determine

The inflation in the economy of Pre.

Sub part (c):

Expert Solution

Answer to Problem 1FT

The inflation is 4 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. It is also given that the velocity of money increases by 4 percent. The real growth in the economy is given to be 2 percent.

Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the sum of the increase in the money supply and the velocity of money as follows:

Inflation=(Increase in money supply+Velocity of money)−Real growth rate=(2+4)−2=4

Thus, the inflation in the economy is 4 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Answer 23

Sub part (c):

To determine

The inflation in the economy of Pre.

Answer 24

Sub part (c):

Expert Solution

Answer to Problem 1FT

The inflation is 4 percent.

Answer 25

Sub part (c):

Expert Solution

Answer 26

Sub part (c):

Expert Solution

Answer 27

Expert Solution

Answer 28

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. It is also given that the velocity of money increases by 4 percent. The real growth in the economy is given to be 2 percent.

Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the sum of the increase in the money supply and the velocity of money as follows:

Inflation=(Increase in money supply+Velocity of money)−Real growth rate=(2+4)−2=4

Thus, the inflation in the economy is 4 percent.

Answer 29

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Answer 30

Sub part (d):

To determine

The inflation and the real growth in the economy of Pre.

Sub part (d):

Expert Solution

Answer to Problem 1FT

The inflation is 8 percent and real growth rate is 2 percent.

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. Here, there is a change in the velocity of money. The velocity of money increases by 8 percent.

The changes in the velocity of money do not affect the real growth in the economy. Thus, the real growth rate is unchanged and it will remain same as 2 percent. Therefore, the inflation in the economy can be calculated by subtracting the real growth rate from sum of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(2+8)−2=8

Thus, the inflation in the economy is 8 percent and the real growth rate is 2 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Answer 31

Sub part (d):

To determine

The inflation and the real growth in the economy of Pre.

Answer 32

Sub part (d):

Expert Solution

Answer to Problem 1FT

The inflation is 8 percent and real growth rate is 2 percent.

Answer 33

Sub part (d):

Expert Solution

Answer 34

Sub part (d):

Expert Solution

Answer 35

Expert Solution

Answer 36

Explanation of Solution

It is given that the money supply in the economy increases by 2 percent. Here, there is a change in the velocity of money. The velocity of money increases by 8 percent.

The changes in the velocity of money do not affect the real growth in the economy. Thus, the real growth rate is unchanged and it will remain same as 2 percent. Therefore, the inflation in the economy can be calculated by subtracting the real growth rate from sum of the increase in the money supply and velocity as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(2+8)−2=8

Thus, the inflation in the economy is 8 percent and the real growth rate is 2 percent.

Answer 37

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Answer 38

Sub part (e):

To determine

The inflation in the economy of Fri.

Sub part (e):

Expert Solution

Answer to Problem 1FT

Inflation is 0 percent.

Explanation of Solution

The money supply growth rate in the economy is given to be 3 percent. whereas the velocity of money is given as 0 percent. The real growth rate of the economy is given to be 3 percent. Thus, the inflation rate in the economy can be calculated as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(3+0)−3=0

Thus, the inflation in the economy is 0 percent and it is the rate of inflation which is best according to Milton Friedman.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Answer 39

Sub part (e):

To determine

The inflation in the economy of Fri.

Answer 40

Sub part (e):

Expert Solution

Answer to Problem 1FT

Inflation is 0 percent.

Answer 41

Sub part (e):

Expert Solution

Answer 42

Sub part (e):

Expert Solution

Answer 43

Expert Solution

Answer 44

Explanation of Solution

The money supply growth rate in the economy is given to be 3 percent. whereas the velocity of money is given as 0 percent. The real growth rate of the economy is given to be 3 percent. Thus, the inflation rate in the economy can be calculated as follows:

Inflation=(Increase in money supply+Velocity)−Real growth rate=(3+0)−3=0

Thus, the inflation in the economy is 0 percent and it is the rate of inflation which is best according to Milton Friedman.

Answer 45

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Answer 46

Sub part (f):

To determine

The inflation and the real growth in the economy of Fri.

Sub part (f):

Expert Solution

Answer to Problem 1FT

The inflation is -2 percent and real growth rate is 3 percent.

Explanation of Solution

It is given that the money supply in the economy increases by only 1 percent. It is also given that the velocity of money is 0 percent. The real growth in the economy is unchanged and thus, it will remain as 3 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=1−3=−2

Thus, the inflation in the economy is -2 percent and the real growth rate is 3 percent.

Economics Concept Introduction

Concept introduction:

Inflation: The inflation is the abnormal rise in the general price level in the economy.

Answer 47

Sub part (f):

To determine

The inflation and the real growth in the economy of Fri.

Answer 48

Sub part (f):

Expert Solution

Answer to Problem 1FT

The inflation is -2 percent and real growth rate is 3 percent.

Answer 49

Sub part (f):

Expert Solution

Answer 50

Sub part (f):

Expert Solution

Answer 51

Expert Solution

Answer 52

Explanation of Solution

It is given that the money supply in the economy increases by only 1 percent. It is also given that the velocity of money is 0 percent. The real growth in the economy is unchanged and thus, it will remain as 3 percent. Thus, the inflation in the economy can be calculated by subtracting the real growth rate from the increase in the money supply as follows:

Inflation=Increase in money supply−Real growth rate=1−3=−2