Based on your knowledge of the Quantity Theory of Money and the Equation of Exchange, answer the following questions. (20 points)

Assume the Bank of Canada has been instructed by the government to maintain a constant price level in the economy. What should it do if the economy experiences a boom in the business cycle that increases the real GDP increases by 3.5%? Explain briefly.

Assume the Bank of Canada has been instructed by the government to maintain a constant price level in the economy. What should it do if the velocity of money declines by 2%? Explain briefly.

Assume the Bank of Canada has been instructed by the government to maintain a constant price level in the economy. What should it do if the economy experiences a recession in which the real GDP declines by 3%? Explain briefly.

Assume the money supply is $1,200 billion, the velocity of circulation is 8, and the price level is $6. What is the level of real output and nominal output?

Assume the money supply is $1,200 billion, the price level is $6, and velocity remains constant. What will happen if the money supply rises by 10%?

Q5. Use the table data below about this economy to answer the questions that follow regarding employment/unemployment. Show all calculations. (20 points)

Group	Number in Millions
Relevant population	??
Not in labor force	85
Labor force	245
Employed	??
Unemployed	25

What is the relevant population in this economy?

How many people are employed in this economy?

Calculate the unemployment rate.

Calculate the labor force participation rate.

Given the unemployment rate you calculated in c) suppose the structural unemployment is 2%, the frictional unemployment is 3.5%, and the seasonal unemployment is 1%. What percent of the labor force is cyclically unemployed?