You are given the following data of an economy over a four-year period: 1 2 3...

  

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You are given the following data of an economy over a four-year period: 1 2 3 4 5 6 7 8 9 Period M AM/M V AV/V P AP/P Y AY/Y 1 1000 5 10 500 2 1050 508 3 950 4 1080 M=money stock; V-velocity of money; P=price level; Y-aggregate output Note: in columns 3, 5, 7 and 9 you will have only 3 values for growth rates over the 4-year period a) Complete columns 4 and 5 given the classical assumptions regarding money velocity. Make sure to state the relevant assumption. b) In accordance with classical economists, assume that Y has a constant growth rate over each of the four periods as a result of changes in labor, technology and capital. Calculate this growth rate by using the two levels of Y given in column 8. Complete columns 8 and 9. Show your work. c) Complete column 3 with the help of column 2. In other words, calculate the growth rate of the money stock using the levels. d) Now complete column 7 which represents the central result of the classical theory of money. Note that you do not need the levels of P in column 6 for this calculation. Explain the intuition behind the result in the context of classical dichotomy. Lastly, complete column 6. You are given the following data of an economy over a four-year period: 1 2 3 4 5 6 7 8 9 Period M AM/M V AV/V P AP/P Y AY/Y 1 1000 5 10 500 2 1050 508 3 950 4 1080 M=money stock; V-velocity of money; P=price level; Y-aggregate output Note: in columns 3, 5, 7 and 9 you will have only 3 values for growth rates over the 4-year period a) Complete columns 4 and 5 given the classical assumptions regarding money velocity. Make sure to state the relevant assumption. b) In accordance with classical economists, assume that Y has a constant growth rate over each of the four periods as a result of changes in labor, technology and capital. Calculate this growth rate by using the two levels of Y given in column 8. Complete columns 8 and 9. Show your work. c) Complete column 3 with the help of column 2. In other words, calculate the growth rate of the money stock using the levels. d) Now complete column 7 which represents the central result of the classical theory of money. Note that you do not need the levels of P in column 6 for this calculation. Explain the intuition behind the result in the context of classical dichotomy. Lastly, complete column 6.