Question

Question 31 (1 point) According to the quantity equation, if Y and M are constant and V doubles, what factor does the price level multiply by? 2 1/2 1/4 Question 32 (1 point) Velocity in country of Nemedia always stable. In 2014, the money supply was $100 billion and GDP was $300 billion. In 2015, the money supply increased by 10 percent, real GDP increased by 5 percent. By how much did the price level increase between 2014 and 2015? 2.38 percent 9.50 percent 4.76 percent O 10.0 percent

Answer 1

Answer 31. 2

reason- M*V=P*Y

If M and Y are Constant.

If V doubles, P also Doubles to Balance the equation.

So P is multiplied by 2.

Answer 32. 4.76 percent

reason-

In 2001

M=$100, Y=$300

In 2002, M rises 10% & Y rises 5%

M=$110 & Y=$315

PY= Nominal GDP=$660

P*315=$660

P= 2.095

MV=PY

110*V=660

V=6

P in 2001 was

100*6=P*300

P= 2

Increase in P= ((2.095-2)/2)*100= 4.76%

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