ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Assume that the quantity theory of money holds and that velocity is constant at 4. Output is fixed at
its full-employment value of 42,000, and the price level is 1.50.
a. Determine the following:
Real demand for money:
(enter your response as an integer)
Nominal demand for money:
(enter your response as an integer)
b. In this same economy the government fixes the nominal money supply at 10,000. With output fixed at
its full-employment level and with the assumption that prices are flexible, what will be the new price level?
P = (enter your response as a decimal rounded to two decimal places).
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Transcribed Image Text:Assume that the quantity theory of money holds and that velocity is constant at 4. Output is fixed at its full-employment value of 42,000, and the price level is 1.50. a. Determine the following: Real demand for money: (enter your response as an integer) Nominal demand for money: (enter your response as an integer) b. In this same economy the government fixes the nominal money supply at 10,000. With output fixed at its full-employment level and with the assumption that prices are flexible, what will be the new price level? P = (enter your response as a decimal rounded to two decimal places).
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