Question: You are given the following data for 2006 and 2007 2006 1000 8.0 12000 Money supply Velocity Real GDP 2007 1050 8.0 12000 a)

You are given the following data for 2006 and 2007 2006 1000

You are given the following data for 2006 and 2007 2006 1000 8.0 12000 Money supply Velocity Real GDP 2007 1050 8.0 12000 a) Find the price level for 2006 and 2007. What is the rate of inflation between the two years? (2 marks) b) What is the rate of inflation between 2006 and 2007 if the money supply in 2007 is 1100 instead of 1050? (2 marks) c) What is the rate of inflation between 2006 and 2007 if the money supply in 2007 is 1100 and output in 2007 is 12600? (1 mark)

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