The following is data from 2018 for the tiny island nation of Coco Loco: money supply =
Question:
The following is data from 2018 for the tiny island nation of Coco Loco: money supply = $800 million; price level = 3.2; velocity of money = 3. Use the quantity theory of money to answer the following questions.
a. What is the value of real output (income) in 2018?
b. What is the value of nominal GDP in 2018?
c. If real output doubled, by how much would the money supply need to change?
d. If velocity is constant and Coco Loco was experiencing a recession in 2018, what impact would an easy money policy have on nominal GDP?
e. If the annual GDP growth rate is 12 percent in Coco Loco, by how much will the money supply need to change in 2019?
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Using the quantity theory of money equationwe have MV PY where M is the money supply 800 million V i...View the full answer
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Related Book For 
Principles Of Macroeconomics
ISBN: 9781292303826
13th Global Edition
Authors: Karl E. Case,Ray C. Fair , Sharon E. Oster
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