Question: The following is data from 2015 for the tiny island nation of Coco Loco: money supply = $800 million; price level = 3.2; velocity of

The following is data from 2015 for the tiny island nation of Coco Loco: money supply = $800 million; price level = 3.2; velocity of money = 3. Use the quantity theory of money to answer the following questions.

a. What is the value of real output (income) in 2015?

b. What is the value of nominal GDP in 2015?
c. If real output doubled, by how much would the money supply need to change?

d. If velocity is constant and Coco Loco was experiencing
a recession in 2015, what impact would an easy money
policy have on nominal GDP?
e. If the annual GDP growth rate is 12 percent in Coco Loco, by how much will the money supply need to change in 2016?

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a M V P Y so 800 million 3 32 x Y Y 2400 million 32 Y 750 million b Nominal GDP P x Y so nom... View full answer

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