Inhabitants of Pandora use stone beads as money. On average, every stone bead is used five times

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Inhabitants of Pandora use stone beads as money. On average, every stone bead is used five times per year to carry out transactions.

The total supply of beads is forty million.

a) What is the level of aggregate spending in Pandora according to the quantity theory of money?

b) Suppose now that the inhabitants of Pandora use less money to conduct the same number of transactions (i.e., each individual carries fewer beads). What is the effect on the velocity of money?

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Macroeconomics Policy And Practice

ISBN: 9781137393951

1st Edition

Authors: Frederic S. Mishkin

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Question Posted: Nov 11, 2024 05:00 AM

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Inhabitants of Pandora use stone beads as money. On average, every stone bead is used five times

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Macroeconomics Policy And Practice

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