42 PART ONE O Institutions and Markets 11. of equal amounts of two types of products. The first product per sells for $100 each, and the second product sells for $500 each. 12. What will be the size of the GDP? c, Now assume that the RO of 2.4 million products is composed cen 8. Assume that a country estimates its MI money supply at $20 million. A broader measure of the money supply, M2, is $50 million. The country's gross domestic product is $100 million. Production or real output for the country is 500,000 units or products. a. Determine the velocity of money based on the MI money supply b. Determine the velocity of money based on the M2 money c. Determine the average price for the real output. 9. Using the data in Problem 7 along with the monetarists' view of the relationship between money supply and the gross domestic product (GDP), answer the following a. If the Mi money supply increases by 10 percent and the MI velocity of money does not change, what is the expected value 12. kno of the GDP for next year? b. Based on the information from (a), if real output does not change next year, what is the expected average price for the products? What percentage change, if any, would take place in Scen Prob Velo the price level? c. If the M2 money supply decreases by 10 percent and the M2 velocity of money does not change, what is the expected Real value of GDP next year? Price d. Based on information from (c), if the price level does not change next year, what will the expected real output in units or products be? 10. The following information was gathered for the XYZ economy b. velocity of money 3.8 times; average price level $85; and real. output- 10,000 units. Answer the following questions: What is the nominal gross domestic product (GDP) for the a. XYZ economy? b. What is the size of the money supply for the XYZ economy? c. If real output increases by 10 percent next year, but the price level and velocity of money do not change, what money supply amount will be needed to support this real growth in d. economic activity? d. What will be the money supply needed to support economic activity next year if real output increases to 12,000 units, the average price increases to $90, and velocity increases to four e. times