Question
In year1, the economy is at full employment and real GDP is$400 million, the GDP deflator is 200(a price level of2), and the velocity of
In year1, the economy is at full employment and real GDP is$400 million, the GDP deflator is 200(a price level of2), and the velocity of circulation is 20.
In year2, the quantity of money increases by 20 percent.
If the quantity theory of moneyholds, calculate the quantity ofmoney, the GDPdeflator, realGDP, and the velocity of circulation year 2.
Please show your calculations for the following questions. No marks will be awarded if you only produce the answers.
1.What is the Quantity of Money in Year 1?
2.What is the Quantity of Money in Year 2?
3.What is the GDP Deflator in Year 2?
4.What is the real GDP in Year 2?
5. What is the Velocity of Circulation in Year 2?
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Managerial Economics and Business Strategy
Authors: Michael R. baye
7th Edition
978-0073375960, 71267441, 73375969, 978-0071267441
