Suppose that initially the money supply is $2 trillion, the price level equals 4, the real GDP is $6 trillion in base-year dollars, and income velocity of money is 12.Then the money supply increases by $200 billion, while real GDP and income velocity of money remain unchanged.a. According to the quantity theory of money and prices, calculate the new price level after the increase in money supply: 4.4.b. Calculate the percentage increase in money supply: 10 %c. Calculate the percentage change in the price level: 10 %.d. The percentage changes in the money supply isV percentage changes in the price level.less than theequal to thegreater than the

An important theory of macroeconomics that relates the money supply in an economy and the price…

Suppose that initially the money supply is S2 trillion, the price level equals 4, the real GDP is $6 trillion in base-year dollars, and income velocity of money is 12. Then the money supply increases by $200 billion, while real GDP and income velocity of money remain unchanged. a. According to the guantihutheory.of money.and.arices, calculate the new price level ater the increase in money supply. 4.4. b. Calculate the percentage increase in money supply. 10 %. c. Calculate the percentage change in the price level 10 % d. The percentage changes in the money supply is | percentage changes in the price level less than the equal to the greater than the

Suppose that initially the money supply is S2 trillion, the price level equals 4, the real GDP is $6 trillion in base-year dollars, and income velocity of money is 12. Then the money supply increases by $200 billion, while real GDP and income velocity of money remain unchanged. a. According to the guantihutheory.of money.and.arices, calculate the new price level ater the increase in money supply. 4.4. b. Calculate the percentage increase in money supply. 10 %. c. Calculate the percentage change in the price level 10 % d. The percentage changes in the money supply is | percentage changes in the price level less than the equal to the greater than the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An increase in the level of nominal aggregate output (Y) and the purchase of government securities by the central bank Select one: Oa. money supply unchanged, money demand decrease and interest rate decrease Ob. money supply increase, money demand increase, interest rate uncertain Oc. money supply increase, money demand unchanged, interest rate decrease d. money supply decrease, money demand unchanged, interest rate Increase O e. money supply decrease, money demand decrease, interest rate increase page Next page on this page pe here to search
a. Prove that money supply equation in an economy is given by, M={(cr + 1) / (cr + rr)}B b. State the determinants of money supply. c. Given that the currency deposit ratio is 0.1 and reserve deposit ratio is 0.01, by how much would money supply increase if the monetary base rises to Gh¢ 200,000.
Suppose that initially the money supply is S2 trillion, the price level equals 4, the real GDP is $6 trillion in base-year dollars, and income velocity of money is 12. Then the money supply increases by $200 billion, while real GDP and income velocity of money remain unchanged. a. According to the guantity theory of money and prices, calculate the new price level after the increase in money supply:.