26. Suppose the GDP growth rate is 6 percent and inflation is 2 percent. If the...
26. Suppose the GDP growth rate is 6 percent and inflation is 2 percent. If the velocity of money remains constant, what is the change in real money balances?
27.It sometimes happens that during a severe recession the unemployment rate decreases a bit long before the economy recovers. Why does that happen?
Homework Answers
26. Constant velocity of money means that the growth rate of velocity of money is zero.
Growth rate of money supply + Growth rate of velocity of money= Inflation rate + Growth rate of output
Growth rate of money supply+0= 2+6
Growth rate of money supply= 8
Hence, change in real money balances (Growth rate of money supply) is 8%
Add Answer to:
26. Suppose the GDP growth rate is 6 percent and inflation is 2
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Suppose the GDP growth rate is 6 percent and inflation is 2 percent. 26. If the...
Suppose the GDP growth rate is 6 percent and inflation is 2 percent. 26. If the velocity of money remains constant, what is the change in real money balances?
27. It sometimes happens that during a severe recession the unemployment rate decreases a bit long...
27. It sometimes happens that during a severe recession the unemployment rate decreases a bit long before the economy recovers. Why does that happen?
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The GDP growth rate is 8 percent and inflation is 4 percent. If the velocity of money remains constant, a. what is the change in real money balances? b. what is the change in money supply?
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The figure below shows the growth in the money supply and average inflation rates for 160...
The figure below shows the growth in the money supply and
average inflation rates for 160 countries from 1991–2011. For most
countries, there is a one-to-one ratio between money growth and
inflation. For example, both the growth in the money supply and the
average inflation rate was close to 100% in Belarus.
Refer to the figure to answer the following questions.
1st attempt
Part 1 (1 point)
See Hint
Consider the countries that lie on the line, which shows a
one-to-one...
The velocity of circulation is constant, real GDP is growing at 5 percent a year, the...
The velocity of circulation is constant, real GDP is growing at 5 percent a year, the real interest rate is 2 percent a year, and the nominal interest rate is 3 percent a Calculate the inflation rate, the growth rate of money, and the growth rate of nominal GDP The inflation rate is percent a year The growth rate of money is percent a year. The growth rate of nominal GDP percent a year Google Sei
Suppose the GDP growth rate is 6 percent and inflation is 2 percent. 26. If the velocity of money remains constant, what is the change in real money balances?
27. It sometimes happens that during a severe recession the unemployment rate decreases a bit long before the economy recovers. Why does that happen?
Question 6: Inflation and the quantity theory Suppose velocity is constant, the growth rate of real GDP is 3% per year, and the growth rate of money is 5% per year. Calculate the long-run rate of inflation according to the quantity theory in each of the following cases: (a) What is the rate of inflation in this baseline case? (b) Suppose the growth rate of money rises to 10% per year. (C) Suppose the growth rate of money rises to...
The figure below shows the growth in the money supply and
average inflation rates for 160 countries from 1991–2011. For most
countries, there is a one-to-one ratio between money growth and
inflation. For example, both the growth in the money supply and the
average inflation rate was close to 100% in Belarus.
Refer to the figure to answer the following questions.
1st attempt
Part 1 (1 point)
See Hint
Consider the countries that lie on the line, which shows a
one-to-one...
The velocity of circulation is constant, real GDP is growing at 5 percent a year, the real interest rate is 2 percent a year, and the nominal interest rate is 3 percent a Calculate the inflation rate, the growth rate of money, and the growth rate of nominal GDP The inflation rate is percent a year The growth rate of money is percent a year. The growth rate of nominal GDP percent a year Google Sei
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