Suppose that the money supply of a country is $90 billion and the velocity of money is 3. The economy's total production quantity is 630 billion units. Instructions: In part a, round your answer to 2 decimal places. In part b, enter your answer as a whole number. a. According to monetarist thought, what will be the average price of a good produced in this economy? b. What is this country's GDP? billion
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- Is it possible that money supply can be more than the money demand (this means that we can have too much money)?a) 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.According to Monetarism, when does an increase in money supply change both Real GDP andprice level? In the short run or in the long run? Explain your answer using a diagram.
- a) 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. b) 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.the government of a country increases the growth rate of the money supply from 5 percent per year to 50 percent per year. what happened to prices?According to Monetarism, when does an increase in money supply change only price level andnot Real GDP? In the short run or in the long run? Explain your answer using a diagram.
- 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 ratesIf the unemployment rate falls below its long-run level, which policies would be appropriate to stabilize output? a. increase the money supply, increase taxes b. increase the money supply, cut taxes c. decrease the money supply, increase taxes d. decrease the money supply, cut taxesWhat is the ideal balance between monetary and fiscal policy for a nation like Japan, where prices are rising yet unemployment is under control? a. Decrease taxes, increase government spending and increase money supply b. Decrease taxes, decrease government spending and decrease money supplyc. None of these choice is correctd. Increase taxes, decrease government spending and decrease money supply
- Figure 369-169 VALUE OF MONEY 5 2 MS. D B MS. A C Money Demand QUANTITY OF MONEY Refer to Figure 369-169. If the money supply is MS₂ and the value of money is 5, then the quantity of money demanded is greater than the quantity supplied; the price level will rise. demanded is greater than the quantity supplied; the price level will fall. supplied is greater than the quantity demanded; the price level will rise. supplied is greater than the quantity demanded; the price level will fall.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.Which of the following leads to a lower level of unemployment in the long run? a. an increase in the money supply growth rate, but not an increase in the size of the money supply b. both an increase in the size of the money supply and an increase in the money supply growth rate c. neither an increase in the size of the money supply nor an increase in the money supply growth rate d. an increase in the size of the money supply but not an increase in the money supply growth rate