Question

Hello, please Answer the questions below. Please write clear or type the solution. Thank you

unada x P Canadax d a C:/Users/Moe/Downloads/Assignment%20-%20B.pdf ESSAY. Provide sparate sheet of paper, each question brings 12. 1) Fisheria is a country in which the quantity theory of money operates. The country has a constant population, capital stock, and technology. In 2010, real GDP was $300 million, the quantity of money was $60, and the velocity of circulation of money was 10. In 2015, the price level rose by 20 percent. a) What was the price level in 2014? (The price level is measured by the GDP deflator, which is 100 in the base year. So the price level from the equation of exchange needs to be multiplied by 100 to convert it to the GDP deflator.) b) What was real GDP in 2015? c) What was the velocity of circulation in 2015? d) What was the quantity of money in 2015? 2) A labor force survey in Brownland records the following data: Employed: 189,000 Unemployed: 15.000 Not in the labor force: 84,000 a) Calculate the unemployment rate b) Calculate the labor force participation rate. Billions of bonts 320 200 60 Item GDP Consumption expenditure Government expenditure on goods and services Investment Exports of goods and services Government budget deficit 3) The table above shows some data for Wiland a country whose currency is the bont The f all settlement balance net interest income, and net transfers from abroad are zero

Answer 1

Solving first 4 parts as per HOMEWORKLIB POLICY. Please post the rest separately. Thank you.

1a. As given, the price level is measured by the GDP deflator and GDP deflator is always 100 in the base year. Since the price level rose by 20%, it means the

GDP deflator=Price level=1.2*100=120.

1b. We know that

GDP deflator=(Nominal GDP/Real GDP)*100

Since it is given that in 2014, the real GDP was 300 million. Since that is the base year- its real GDP and nominal GDP will be the same. It is also given that the country has constant population, capital stock and technology. So its real GDP will also remain same in 2015 also. Since we know that the GDP deflator is 120. So, we get

Nominal GDP in 2015=300*120/100=360 million.

1c. Velocity of money is given by

Nominal GDP/amount of money in circulation.

Since both numerator and denominator grew by 20% in 2015, the velocity of money will remain same at 10.

1d. It is given that quantity theory of money applies to the country. The theory states that the price level is directly proportional to money in circulation. It is given that price level grew by 20%. So,

Quantity of money in circulation will also grow by 20%=60*1.2=72.