1. Consider the following information:

Years	Money Supply	Nominal GDP (PY)	Price (P) In %	V	K	Y
2019	$3,500 billion	$23.00 trillion	140
2020	$3,700 billion	$23.50 trillion	145
2021	$4,000 billion	$24.25 trillion	150
2022	$4,500 billion	$25.50 trillion	170

Here, Y = Real GDP; P = Price level, V = Velocity of money and K = Proportion of nominal GDP kept as liquidity for transactions.

1. Complete the columns for V, K, and Y. And make your observations on them.
2. Calculate year-to-year inflation rates and real GDP growths.

1. Let M=$5,000 billion, nominal GDP=$27.0 trillion and P=150 in %. Calculate V, and K and Y.

1. Let new M doubles to $10,000 billions and P doubles to 300 in % from their levels in question (2), other things remaining the same. Recalculate real GDP and draw inference on super-neutrality of money. Explain why it is not observed in the real world.

1. Using the relevant information from question #2, calculate real balance and assume that households keep it constant. Now, let P rises from 150 in % to 200 in %. Calculate how much money to be added in order to maintain the real balance unchanged. State its economic implication.

Note:

All the numbers in this problems set are hypothetical.