Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
8th Edition
ISBN: 9781337368087
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 22, Problem 1PA
Subpart (a):
To determine
Money supply,
Subpart (b):
To determine
Money supply, price level, and velocity.
Subpart (c):
To determine
Money supply, price level, and velocity.
Subpart (d):
To determine
Money supply, price level, and velocity.
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In the country of Sparta, mnoney supply equals 13 million drams, real GDP is 65 million drams, the price level is 1.2, and the velocity of
money is 6.
a. What is the value of its nominal GDP?
Nominal GDP: $
million drams.
b. If, in the next year, V remains constant and real GDP increases to 78 million drams, what must happen to money supply in order to
keep prices stable? Round your answer below to 1 decimal place.
Money supply must (Click to select) v to $
million drams.
Please help with this Question
Suppose that this year's money supply is $600 billion, nominal GDP is $15 trillion, and real GDP is $3 trillion.
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.
If 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 keep the money supply unchanged next year.
True
False
If the Fed wants an inflation rate of 9 percent instead, it should the money supply by
. (Hint: The quantity equation can be rewritten as the following percentage change formula: (Percentage Change in M)+(Percentage Change in V)=(Percentage Change in P)+(Percentage Change in Y)Percentage Change in M+Percentage Change in V=Percentage Change in P+Percentage Change in Y.)
Chapter 22 Solutions
Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
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