Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 14, Problem 6QP
(a)
To determine
The change in price level in the short-run.
(b)
To determine
The change in price level in the short-run.
(c)
To determine
The change in price level in the short-run.
(d)
To determine
The change in price level in the short-run.
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Empirical evidence that substantiates the Quantity theory includes which of the following?
Select one or more:
a. Countries with high rates of inflation over many years have high rates of growth of the money supply.
b. In the US each year, the increase in the money supply is within a small margin of the increase in prices that year.
c. Countries with high rates of inflation over many years have high rates of growth of real GDP.
d. Countries with independent central banks tend to have high rates of inflation.
Economics
Which school(s) argue that changes in the
money supply will have no effect
on output?
A. Mainstream
and RET
B. Mainstream and Monetarists
C. RET
D. Monetarists
E. Mainstream
Suppose that a change in government regulations allows banks to start paying interest on checking
accounts.
a. How does this change affect the demand for money?
b. What happens to the velocity of money?
c. If the Fed keeps the money supply constant, what will happen to output and prices in the short
run and in the long run?
Chapter 14 Solutions
Macroeconomics
Ch. 14.1 - Prob. 1STCh. 14.1 - Prob. 2STCh. 14.1 - Prob. 3STCh. 14.2 - Prob. 1STCh. 14.2 - Prob. 2STCh. 14.3 - Prob. 1STCh. 14.3 - Prob. 2STCh. 14.3 - Prob. 3STCh. 14.4 - Prob. 1STCh. 14.4 - Prob. 2ST
Ch. 14.4 - Prob. 3STCh. 14 - Prob. 1QPCh. 14 - Prob. 2QPCh. 14 - Prob. 3QPCh. 14 - Prob. 4QPCh. 14 - Prob. 5QPCh. 14 - Prob. 6QPCh. 14 - Prob. 7QPCh. 14 - Prob. 8QPCh. 14 - Prob. 9QPCh. 14 - Prob. 10QPCh. 14 - Prob. 11QPCh. 14 - Prob. 12QPCh. 14 - Prob. 13QPCh. 14 - Prob. 14QPCh. 14 - Prob. 15QPCh. 14 - Prob. 16QPCh. 14 - Prob. 17QPCh. 14 - Prob. 18QPCh. 14 - Prob. 19QPCh. 14 - Prob. 1WNGCh. 14 - Prob. 2WNGCh. 14 - Prob. 3WNGCh. 14 - Prob. 4WNGCh. 14 - Prob. 5WNGCh. 14 - Prob. 6WNGCh. 14 - Prob. 7WNGCh. 14 - Prob. 8WNG
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- According to Monetarists, what should the government do if unemployment is 4% and inflation is 12%? Select one: a. Decrease the supply of money b. Decrease government spending c. Raise taxes d. Do nothing e. Lower interest ratesarrow_forwarda) Creating additional money will increase money supply. What will happen to price level? Which theory did you use to answer the question? Explain the theory. b) According to Monetarism, when does an increase in money supply change both Real GDP and price level? In the short run or in the long run? Explain your answer using a diagram. c) According to Monetarism, when does an increase in money supply change only price level and not Real GDP? In the short run or in the long run? Explain your answer using a diagram.arrow_forwardWhat do monetarists predict will happen in the short run and in the long run as a result of each of the following? (In each case, assume the economy is currently in long-run equilibrium).(a) Velocity rises. (b) Velocity falls.(c) The money supply rises. (d) The money supply falls.arrow_forward
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- Assume the money supply is $600, the velocity of money is 6, and the price level is $3. Using the quantity theory of money: a. Determine the level of real output. b. Determine the level of nominal output. c. Assuming velocity remains constant, what will happen if the money supply rises 20 percent? d. If the government established price controls and also raised the money supply 5 percent, what would happen? Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers.arrow_forwardLet's assume that in our economy money supply is $15 billion, Velocity (V) is 5, and Output (Y) is $70 billlion in 2019. The base year is 2018. A. Calculate the price level (P) in this economy. B. What can you say about about inflation rate between 2018 and 2019. C. Calculate the money supply in this economy if we want inflation to be zero (0). D. If in 2021 this economy grows by 10% and money supply increases by 15%, what would be the inflation rate? Foarrow_forwardWhat would likely be the short-term impact on a country's inflation rate if the central bank significantly increases the money supply? A. The inflation rate would decrease. B. The inflation rate would remain unchanged. C. The inflation rate would increase. D. The inflation rate would initially increase, then sharply decrease.arrow_forward
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