The nation of Goldbug has a rapidly growing economy, and the velocity of money is not changing, but the inflation rate is negative. You can conclude from this that...
Group of answer choices
Goldbug's central bank is buying Treasury Bills.
Goldbug's central bank is injecting too much money into the economy.
Goldbug's banking system lacks competition.
Goldbug's money supply must be growing slower than its real GDP.
Answer: Goldbug's money supply must be growing slower than its real GDP.
If the velocity of money is not changing (constant), then:
Inflation = Money Growth – Real GDP Growth
The nation of Goldbug has a rapidly growing economy, and the velocity of money is not...
The nation of Goldbug has a rapidly growing economy, and the velocity of money is not changing, but the inflation rate is negative. You can conclude from this that... Goldbug's central bank is buying Treasury Bills. Goldbug's central bank is injecting too much money into the economy. Goldbug's banking system lacks competition. Goldbug's money supply must be growing slower than its real GDP.
If the economy of the nation of Fingle-Fargle is growing at 6% per year, its money supply grows at 10% per year, and its velocity growth is stable, then Fingle-Fargle's inflation rate is... Group of answer choices 4% 6% 16% 60%
Suppose that the velocity of circulation of money is constant and real GDP is growing at 2 percent a year. a) To achieve an inflation target of 2 percent a year, at what rate would the central bank (Bank of Canada) grow the quantity of money? b) At what growth rate of the quantity of money would deflation be created?
Suppose that velocity of money is constant, the expected inflation rate is equal to the actual inflation rate, and the expected real interest rate is 4%. Answer the following questions. Justify your answers. Does the quantity theory allow for money to be used for assets and risk diversification purposes? When the growth rate of money supply is 7% and the growth rate of real GDP is 3%, what is the nominal interest rate? Let the growth rate of money supply...
When the money demand curve shifts right and the money supply is unchanged, the equilibrium price level decreases and the equilibrium value of money increases. true false The money supply in Grayfield is $8 billion. Nominal GDP is $32 billion and real GDP is $24 billion. The central bank of Grayfield has instituted a policy of zero inflation. Assuming that velocity is stable, if real GDP grows by 2.5 percent this year then the central bank of Grayfield will increase...
Here is some data on the economy of a certain country. Use this data for all three parts of question 1. M1 Money Supply: $190 Billion Real GDP: $765 Billion Velocity of M1 Money Supply: 4.3 Question 1a: Right now, what is the rate of inflation in that country? How can you tell? Question 1b: If they want to change the inflation rate to about 2% (which the Fed says is ideal), can they...
According to the quantity theory of money, if aggregate spending in an economy increases by 3% and real GDP increases by 1%, we also know that there is: Group of answer choices a. a positive supply shock. b.a recession. c. inflation d. a war.
38. According to the quantity theory of money, the inflation rate equals A) money supply minus real GDP. 8) the growth rate of the money supply minus the growth rate of real GDP, C) real GDP minus the money supply. D) the growth rate of real GDP minus the growth rate of the money supply of money pre rate than reacop. A) money supporowing at a fidower rate the 39. The quantity theory of money predicts that in the long...
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in general, A) not change the money supply. B) not change the quantity of reserves held by banks. C) decrease the quantity of reserves held by banks. D) increase the quantity of reserves held by banks. Suppose, r0.10,0 $400 Billion, D-5800 Billion, EX.R- $0.8 billion MI-CD-$1200 Billion 2. Refere to above information, the mm (mony multiplier) is A) 1.5 B) 2.5 C) 2 D) 4...
"The money supply of an economy increases when the central bank simultaneously decreases the reserve requirement and sells government bonds in open market." Explain whether this statement is true, false or uncertain. (6 marks) What should money growth rate be if real output grows 4% per year, velocity grows 2% per year, and the central bank targets inflation to be 2% per year? (4 marks) What is the inflation tax? Explain. (6 marks) Explain (with the aid of diagrams) whether...