Question 6

In 2019 in Vietnam, money supply, M^s, was 2,500 trillion Vietnamese dong, the one-year nominal interest rate, i, was 6 percent (i = 0.06), and money market was in equilibrium, M^s = kPY/i. If at the time, the propensity to hold money was k = 0.025, what was the nominal GDP, PY, of the Vietnamese economy in 2019?

a. 150 trillion Vietnamese dong

b. 1,042 trillion Vietnamese dong

c. 2,500 trillion Vietnamese dong

d. 6,000 trillion Vietnamese dong

e.41,667 trillion Vietnamese dong

Question 7

In question 6 above, suppose in 2020 Vietnam's nominal GDP and the propensity to hold money remained the same as they were in 2019. If the central bank wanted to lower the interest rate to 4 percent in 2020, how much money should it supply to the market?

a. 1,667 trillion Vietnamese dong

b. 1,750 trillion Vietnamese dong

c. 2,500 trillion Vietnamese dong

d. 3,750 trillion Vietnamese dong

e.4,000 trillion Vietnamese dong