1. (2 points) Suppose that the US economy produces Y =GDP =12,000 Billions of Dollars in a base year with price level, P =1.0. The quantity of money(M) is 4,000 Billions of Dollars. Estimate the velocity of money (V) by the quantity equation. V= 2. (2 points) If nominal GDP is $ 600 Billion Dollars and Real GDP is 400 Billion Dollars and the money supply is 200 Billion Dollars, estimate the price level (P) and velocity of money (V): P = V= 3. (2 points) Because most loans are written in nominal terms, an unexpected decrease in price level (deflation) hurts: (a) creditor (b) debtor (c) both creditor and debtor (d) Nether creditor nor debtore 4. (2 points) According to Monetary neutrality and classical macroeconomics, the increase in money supply (a) Increase the GDP deflator (b) decrease the GDP deflator (c) Increase real GDP (d) decrease real GDP (e) both GDP deflator and real GDP do not change 5.(2 points) A rise in the price level causes to increase making the aggregate demand curve slopes downward (a) the interest rate (b) the currency (c) inflation rate (d) expected price level