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money and banking homework questions use the table below to solve the three questions l. 2. 3. If velocity and aggregate output remain constant at
money and banking homework questions
use the table below to solve the three questions
l. 2. 3. If velocity and aggregate output remain constant at 5 and $1,000 billion, respectively, what happens to the price level if the money supply declines from $400 billion to $300 billion? What happens to nominal GDP if the money supply grows by 20% but velocity declines by 30%? suppose the liquidity preference function is given by = IOOOi Use the money demand equation along with the following table of values, to calculate the velocity for each period. Interest rate Y (in billions) Interest Rate Period 1 0.05 Period 1 12,000 0.05 Period 2 0.07 Period 2 12,500 0.07 Period 3 0.03 Period 3 12,250 0.03 Period 4 0.05 Period 4 12,500 0.05 Period 5 0.07 Period 5 12,800 0.07 Period 6 0.04 Period 6 13,000 0.04 Period 7 0.06 Period 7 13,200 0.06
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