Assuming fixed exchange rates, find the size of the deficit or surplus in the balance of payments of the nation described in
(a) Problems 3a and 4a.
(b) Problems 3b and 4b.
(c) Problems 3c and 4c.
Problem 3
(a) What is the quantity of money demanded by the nation?
(b) By how much will the quantity of money demanded rise if the nation’s nominal GDP rises to $220 billion?
(c) What happens to the nation’s demand for money if its nominal GDP increases by 10 percent each year?
Problem 4
(a) How much is the monetary base of the nation?
(b) What is the value of the money multiplier?
(c) What is the value of the total supply of money of the nation?