Assuming that the supply of money in the economy is $3.2 trillion and velocity is 5, answer questions a through d.

a. What is the dollar value of output produced in the economy?

b. What would happen to the dollar value of output and the real value of output if $50 billion were added to the money supply when the economy was at full employment?

c. What would happen to prices and to the level of output produced in the economy if the Fed reduced the supply of money to dampen inflationary pressure when the economy was at full employment?

d. What would happen to the dollar value of output if people spent money faster (velocity increased) following a reduction in the money supply by the Fed?