Question
Consider the following table: Year Quantity of Money (billions of $) Velocity Real GDP (billions of 2012 $) GDP Deflator 2006 1,366 10.253 15,338 2009
Consider the following table:
| Year | Quantity of Money (billions of $) | Velocity | Real GDP (billions of 2012 $) | GDP Deflator |
|---|---|---|---|---|
| 2006 | 1,366 | 10.253 | 15,338 | |
| 2009 | 1,692 | 8.687 | 0.953 | |
| 2012 | 2,461 | 6.719 | 16,197 |
Fill in the missing data, using the quantity equation of money.
Why might velocity change in this way?
Calculate the average inflation rate between 2006 and 2009 and between 2009 and 2012.
If velocity had remained at the 2006 level, what would the deflator have been in 2009 and 2012, assuming real GDP and money are as in the table?
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Modern Principles Microeconomics
Authors: Tyler Cowen, Alex Tabarrok
4th Edition
1319098762, 978-1319098766
