me information below to answer the next question. Real GDP = $4 billion - Velocity = 4 According to the equation of exchange, the value of the money supply is: $5 billion a. b. C. d. Price Level = 1.25 $1.25 billion $12.8 billion impossible to determine from the information given.
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- All other things being equal, by how much will nominal GDP expand if the central bank Increases the money supply by 100 billion, and the velocity of money is 3? (Use this information as necessary to answer the following 4 questions.)In the country Constantania, suppose the velocity of money is always the same. Last year, the money supply was $2 billion and real GDP was $5 billion. This year, the money supply increased by 6 percent, real GDP by 4 percent, and nominal GDP is $6.5 billion. a) Calculate the velocity of money and the price levels in the two years, and then calculate the inflation rate. b) Calculate the inflation rate using the formula AM/M + AV/V = AP/P + AY/Y, where the Greek letter A represents a change and the ratio AM/Mx 100 is the percentage change (or the rate of change) in M. Compare this result with the result you obtained in part a. Why could there be some difference? c) What is the difference between commodity money and fiat money? Why do people accept fiat currency in trade for goods and services?Q47 Which of the following is the definition for the real supply of money? Select one: a. the actual quantity of money, rather than the officially reported quantity. b. the stock of high powered money only. c. the ratio of the real GDP to the nominal money supply. d. the stock of money measured in terms of goods, not dollars.
- 1. Suppose velocity is 3, real output is 9000, and the price level is 1.5. What is the level of real money balances in this economy? 2. Considered the following data for an economy. Currency in circulation held by the public: CU = 400 dollars; Monetary Base: B = 800 dollars; currency/deposit ratio: cu = 0.25. What is the value of reserves in this economy? 3. Considered the following data for an economy. Currency in circulation held by the public: CU = 400 dollars; Monetary Base: B = 800 dollars; currency/deposit ratio: cu = 0.25. What is the value of the money multiplier in this economy? Please answer the three questions above (and highlight the answer if you can). Please explain the math/reasoning usedGood day . can you please assist on the following question below Multiple-choice questions: Select one correct answer for each of the following Q.1.The ________ demand for money arises out of the need to hold money as amedium of exchange. This demand for money is a function of ________.(a) precautionary; interest rates(b) transactions; national income(c) speculative; interest rates(d) precautionary; national income Q.2. Which one of the following statements is NOT true? (a) Money is the most liquid asset.(b) Money is a store of value.(c) Money is a unit of account.(d) Money is another term for income.Q.3. Which of the following will cause the demand curve for money to shift to the right?(a) An increase in real Gross Domestic Product (GDP).(b) A decrease in the repo rate.(c) An increase in the quantity of money available.(d) A decrease in the quantity of money available.QUESTION 4Consider the model of money demand we saw in class. Let the elasticity of money demand with respect to real income be 0.8 and the elasticity of money demand with respect to the interest rate on non-monetary assets be -0.2. Imagine that real income goes up by 3%, the interest rate on non-monetary assets goes up by 1%, and the price level does not change. Then the nominal demand for money changes by________percent.Note: Type in your answer rounded to two decimal places, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard may automatically delete it and you should not do anything about it. In case of percentages, do not type in the percentage symbol "6". fyour answer is a negative number, type a dash in front of your answer, i.e, "-999.99.
- Let’s assume that the nominal Gross Domestic Product, GDP, of a hypothetical country is $45,000 and that the velocity of money of this country is 5. This implies that the money supply, in this country, is:Which of the following statements is correct? a. A fall in the rate of interest will shift both the asset demand and the total demand curves to the right. b. A fall in real GDP will shift both the transactions demand and the total money demand curve to the right. c. A decline in real GDP will shift the transactions demand curve to the left but leave the total money demand curve unchanged. d. An increase in prices will shift the transactions demand curve for money to the right but leave the total money demand curve unchanged. e. A decrease in prices will shift both the transactions demand and the total money demand curves to the left.3.. 1On the planet of Unjustice, the velocity of money is constant. The growth rate of real GDP is by 6% per year, the money supply grows by 20% per year, and the nominal interest rate is 24%. What is the real interest rate in the planet of Unjustice?
- Suppose that this year's money supply is $1,200 billion, nominal GDP is $6,000 billion and real GDP is $5,000 billion. (This question concerns the Equation of Exchange in the Classical Quantity Theory of Money). a) What is the price level (expressed as a percentage-i.e., as a price index)? b) What is the velocity of money? c) Suppose that velocity is constant and the economy's output of goods and services rises by 6 percent each year. If the Fed keeps the money supply constant, what will nominal GDP be next year? d) Under the conditions in c) what will happen to the price level next year? e) What money supply should the Fed set next year if it wants to keep the price level stable? 1) What money supply should the Fed set next year if it wants the inflation rate to be 8 percent?. Based on your knowledge of the Quantity Theory of Money and the Equation of Exchange, answer the following questions. Assume the money supply is $1,200 billion, the velocity of circulation is 8, and the price level is $6. What is the level of real output and nominal output? Assume the money supply is $1,200 billion, the price level is $6, and velocity remains constant. What will happen if the money supply rises by 10%?Given the Quantity Thoeory of Money: if Real GDP equals $2,000, the money supply equals $6,000, and the velocity of money equals 2, then the price level equals 3 24 12 6.
