The following information was gathered for the XYZ economy: velocity of money = 3.8 times; average price level = $85; and real output = 10,000 units.
a. What is the nominal GDP for the XYZ economy?
b. What is the size of the money supply for the XYZ economy?
c. If real output increases by 10 percent next year, but the price level and velocity of money do not change, what money supply amount will be needed to support this real growth in economic activity?
d. What will be the money supply needed to support economic activity next year if real output increases to 12,000 units, the average price increases to $90, and velocity increases to 4 times?

  • CreatedMarch 27, 2015
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