Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Question
Chapter 7, Problem 9RQ
To determine
The relationship between the nominal money supply and the price level and the relationship between the growth rate of the nominal money supply and the rate of inflation.
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Suppose that when everyone wakes up tomorrow, they discover that the government has given them an additional amount of money equal to the amount they already had.
Explain what effect this doubling of the money supply will likely have on the following:
the total amount spent on goods and services
the quantity of goods and services purchased if prices are sticky
the prices of goods and services if prices can adjust
As a result of the change in real GDP, will an increase in the interest rate on bank loans lead to an expansion or a recession? What will happen to the unemployment rate? What will happen to the price level?
what is the meaning of inflation
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