i.According to the quantity theory of money, what would happen to prices when a helicopter drops a large amount of cash on a city? What would happen to the value of money? What impact does such a helicopter drop have on real GDP?

ii.Suppose a country has a money demand function(M/P)^d=kY, wherekis a constant parameter. What is its relationship to the velocity of money?

iii.Suppose, the money supply grows by 12 percent per year, and real income grows by 4 percent per year. With the parameter k constant, what is the average inflation rate? How would inflation be different if real income growth were higher?

iv.During the 1970s and 1980s, Argentina had very high inflation. How do you think this affected the velocity of money in Argentina during the period when inflation increased? Explain why. Include a discussion of the inflation tax in your answer