FREE Trial

Suppose that this years money supply is $500 billion, nominal GDP is $10 trillion, and real GDP is $5 trillion.

Question:

Suppose that this year’s money supply is $500 billion, nominal GDP is $10 trillion, and real GDP is $5 trillion.
a. What is the price level? What is the velocity of money?
b. Suppose that velocity is constant and the economy’s output of goods and services rises by 5 percent each year. What will happen to nominal GDP and the price level next year if the Fed keeps the money supply constant?
c. What money supply should the Fed set next year if it wants to keep the price level stable?
d. What money supply should the Fed set next year if it wants inflation of 10 percent?

This problem has been solved!


Do you need an answer to a question different from the above? Ask your question!

Step by Step Answer:

Answer rating: 46% (13 reviews)

In this problem all amounts are shown in billions a Nominal GDP …View the full answer


answer-question
Answered By
tutor-profile-image
Talha Talib
I am a member of IEEE society. As i am a student of electrical engineering badge 17 but beside of this i am also a tutor in unique academy. I teach calculus, communication skills, mechanics and economics. I am also a home tutor. My student Muhammad Salman Alvi is a brilliant A-level student and he performs very well in academics when i start to teach him. His weak point was mathematics but now he is performing well in mathematics. I am a scholarship holder in Fsc as i scored 1017 marks in metric out of 1100. Later on i got scholarship in Punjab Group of Colleges. I got 2nd position in robotics competition in 2018 as my project home automation select for the exhibition in Expocentre.
4.60+ 23+ Reviews 62+ Question Solved
Related Book For  answer-question
Principles of economics

Principles of economics

ISBN: 978-0538453042

6th Edition

Authors: N. Gregory Mankiw

See More Books
View Solution
Create a free account to access the answer
Cannot find your solution?
Post a FREE question now and get an answer within minutes. * Average response time.
Question Posted: December 14, 2012 06:17:27
See More Questions

Students also viewed these Economics questions

Q:
What are the price level and real GDP? Does Artica have an unemployment problem or an inflation problem? Why? Figure 17.2 shows the aggregate demand curve, AD, and the short-run aggregate supply...
A:
The price level is 130 an......
Q:
What are the price level and real GDP? Does Free zone have an unemployment problem or an inflation problem? Why? Figure 17.3 shows the aggregate demand curve, AD, and the short-run aggregate supply...
A:
The price level is 110 a......
Q:
Suppose that this year the cubs and mariners make it to the world sires, and suppose the cubs, a stronger team, has a 55% chance to win any individual game. Also assume there are no ties. Use 6 runs...
A:
The probability a team wins a game remains constant throughout the series and that......
Q:
Two positive charges, each with charge q = 2.5 nC, are placed as shown in the diagram. The distance d 0.42 m. Find the net electric potential at the point x = 0, y = 0.12 m.
A:
Click to View...
Q:
The equation ending Example 2.5 is a bit jarring because for P we must take the first matrix, which is shown as an inverse, and for P-1 we take the inverse of the first matrix, so that the two -1...
A:
a The check is easy b It is a coincidence in the sense......
Q:
The Salida Salt Company is considering making a bid to supply the highway department with rock salt to drop on roads in the county during the winter. The contract will guarantee a minimum of 25,000...
A:
tr mso height source auto col mso width source auto br mso data placement same cell style16 mso number format 0 00 0 00 0022 0022 mso style name Comma mso style id 3 style17 mso number format 0022 002......
Q:
Either some general practitioners are pediatricians or some surgeons are endocrinologists. But it is not the case that there are any endocrinologists. Therefore, there are some pediatricians. (G, P,...
A:
To translate the given argument into symbolic form we can represent the statements as follows G Gene......
Q:
General Mills makes Nature Valley granola bars, Cheerios cereal, Yoplait yogurt, Hagen-Dazs ice cream, and many other food products. Suppose the product manager of a new General Mills cereal has...
A:
1 23 To compute this let X be the variable cost that g......
Q:
Write a script that attempts to insert a new category named "Guitars" into the Categories table. If the insert is successful, the script should display this message: SUCCESS: Record was inserted. If...
A:
Here s a script that attempts to insert a new category named Guitars into the Categories ta......
Q:
Colt Company reports pretax financial income of $143,000 in 2019. In addition to pretax income from continuing operations (of which revenues are $295,000), the following items are included in this...
A:
1 a Total pretax accounting income 143 000 Income from operations of discontinued Division B 16 000......
Q:
What are the costs of inflation? Which of these costs do you think are most important for the U.S. economy?
A:
The costs of inflation include shoe leather costs associated with r......
Q:
Suppose that changes in bank regulations expand the availability of credit cards so that people need to hold less cash. a. How does this event affect the demand for money? b. If the Fed does not...
A:
a I f people need to hold less cash the demand for money shifts to the lef......
Q:
DeBerg Company has the following sales projections for its second and third quarters: April ..............................$100,000 May ..............................$120,000 June...
A:
Total planned sales Credit sales collected during month Credit sales collected one......
Q:
You are provided with information relating to SS Ltd for the year ended 31 December 2023. Trial balance as at 31 December 2023 Debit Credit Capital Drawings Land and buildings Vehicles Accumulated...
A:
To prepare the Statement of Profit or Loss and Other Comprehensive Income and the Statement of Financial Position for SS Ltd as at December 31 2023 we need to make adjustments and calculations based o......
Q:
Bryan Ltd want to raise 10 million in a rights issue. They currently have 210 million shares outstanding, originally issued at 1 each and now trading for 5.00. They want to have a one for three...
A:
a How many total shares are outstanding after the issue The number of new shares to be issued is cal......
Q:
Review Coke Colas financial statements and answer the following questions: What is Cokes percent of current assets to total assets on its December 31, 2008 balance sheet? What is Cokes percentage of...
A:
Click to View...
Q:
1. Analyze your strategies as a project manager (PM) for each of the following project [CO4,C4, risks. Marks:10] Initially, a traditional relational database management system (RDBMS) was used. But...
A:
As a project manager my strategies for each of the following projects would be as follows 1 CO4 Project Analyze the current traditional relational database management system RDBMS and its limitations......
Q:
(1) Create a clustered index on the student number sno of the student table; (2) In the student table, create a non-clustered index for the name sname; (3) Create a unique index on the course number...
A:
Code for Creating a school database with three tables Student Form Course Schedule and Course Select......
Q:
Explain why fluid pressure on a surface is calculated using horizontal representative rectangles instead of vertical representative rectangles.
A:
You use horizontal repr......
Q:
An annual report of The Campbell Soup Company reported on its income statement $2.4 million as equity in earnings of affiliates. Journalize the entry that Campbell would have made to record this...
A:
Investment in......
Q:
What is the LesterMachlup controversy about?
A:
Richard Lester questioned the validity of the assumption that entrepreneurs behave the way......
Q:
What is the firm's total profit? AR MR AVC ATC 0 $40.00 40.00 2 40.00 40.00 4 40.00 5 40.00 6 40.00 7 40.00 8 40.00 9 40.00 40.00 $31.00 $31.00 $54.00 28.00 29.50 41.00 31.00 30.00 37.67 34.00 31.00...
A:
TR P x Q 40 x 6......
Q:
Suppose price falls to $34. Where should the firm produce, if at all? Does the firm maximize profit or minimize loss at that output level? How much? OUTPUT P AR MR MC AVC ATC 0 $40.00 1 40.00 40.00 3...
A:
At a price of 34 MR MC at 4 units But at 4 units ATC......
Simester And Sullivans Criminal Law Theory And Doctrine 8th Edition - ISBN: 1509964274 - Free Book