1) Consider an economy in which consumers buy only bottles of soda. In a year, consumers in this economy are paid and spend 1,000 dollars. They spend this money only once. Only 100 bottles of soda are produced. a) b) c) d) Suppose this economy satises the quantity theory of money framework: M*V=P*YR. What is YR in this economy? What is M*v or total spending? What is v? Finally, what will P (the price per bottle) be in this case? Suppose that consumers receive additional pay, they now get 1,200 dollars. They continue to spend that on soda within the year. The level of production of soda bottles does not change. What is total spending now? What happens to P? Why? Discuss briey. The idea behind the equation can also be expressed in changes: e A; "3' \"9 Mivr'JWrY Explain how the things that changedand did not changein b) satisfy this equation. All of a sudden, consumers' pay and spending fall from 1,200 to 800 dollars. They continue to spend this money on soda. What happens to P and to (P ? Does this economy display ination or deation