Relationship between money growth and inflation. Consider an economy which only produces corn. The economy has enough labor, capital, and land to produce Y: 2000 bushels of corn. V is constant. In 2008, M = $1000, P = $3fbushel. How many times does a currency not changes hand in this case? Q What is value of the nominal GDP in 2003? S 6000 Suppose in 2009, the government increased money supply by 10%. What is value of M in 2009? S 1100 Assuming there is no change in '1', what is P in 2009? SE What is the inflation rate between 2008 and 2009? E 96. Inflation rate in this case egual to the growth rate of money supply. Now assume, '1" increased by 4%, and M increased by 10%. {use 2 significant digits after the decimal in your answer} What is the growth rate of real GDP? 3 '26 What is the price level in 2009? 3.2 '34: What is the inflation rate between 2008 and 2009 in this case? I 96