Ch.15 HW Monetary Policy & Banking Regulation

M * V = GDP = P * Q (or GDPr)

Typical Keynesian critique: money supply expands to save falling GDP, but V falls too.

#1 _ 8 _ 5 640

#2 600 _ 2400 _ 480

Popular view increases money supply to increase both GDP and prices.

#3 500 6 _ 1 _

#4 _ 6 3900 1.2 _

Inflation is reduced by reducing money supply but also reduces GDP.

#5 600 _ 4800 _ 1600

#6 _ 8 7200 _ 1800

#7 800 _ 6400 4 _

Typical Classical Monetarist critique: money supply is increased to increase GDP but only increases prices while velocity is the same.

#8 320 5 _ _ 200

#9 360 _ _ _ 200

answers: 3 4 4 5 5 8 8 8 9 400 650 900 1600 1600 1800 3000 3000 3200 3250