The velocity of circulation is constant, real GDP is growing at 5 percent a year, the...
20. The velocity of circulation is growing at 3 percent a year, the real interest rate is 4 percent a year, the nominal interest rate is 8 percent a year, and the growth rate of real GDP is 4 percent a year. 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...
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?
Please do the first one, the second one is correct 1 2 The velocity of circulation is growing at 4percet a year, the real interest rate is 2percent a year, the nominal interest rate is 7 percent a year and the growsh rate of real GOP i 3 percent a year Calculate the inflation rate, the growth rate of money, and the growth rate of nominal GDP The inflation rate is 5 percent a year. The growth rate of money...
6. Let real GDP growth-2.4% per year, money growth-5% per year, nominal interest rate-4.8%. and velocity of money-constant. (a) Find the inflation rate, the real interest rate, and the cost of holding money. (b) What are the inflation rate, the real interest rate, and the cost of holding money if the central bank changes the money growth to 6% per year?
Homework 4. Q4 (a)Suppose that the velocity of circulation of money is constant, but GDP is not and assume that GDP grows by 5% per year, the quantity of money grows by 14% a year and the nominal interest rate is 11%, can you calculate the real interest rate?(Hint: you should use the equation ∆M +∆V = ∆P +∆Y and the Fisher equation.) (b)Do you believe that people can have expectations that are consistently wrong in the long-run? In other...
6. Let real GDP growth-2.4% per year, money growth-5% per year, nominal interest rate 4.8% and velocity of money-constant. (a) Find the inflation rate, the real interest rate, and the cost of holding money. (b) What are the inflation rate, the real interest rate, and the cost of holding money if the central bank changes the money growth to 6% per year? 2. An economy produces 5 goods. The quantities produced and the prices of the 5 goods in year...
Question 5 of 5 3 Points Assume the velocity of money is constant. Real GDP grows by 3 percent per year, the money stock grows by 5 percent per year, and the nominal interest rate is 5 percent. What is the real interest rate? Show all formulas used and steps taken.
6. Let real GDP growth-2.4% per year, money growth-5% per year, nominal interest rate 4.8% and velocity of money-constant. (a) Find the inflation rate, the real interest rate, and the cost of holding money. (b) What are the inflation rate, the real interest rate, and the cost of holding money if the central bank changes the money growth to 6% per year?
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...
Question 1 (a) The rates of growth of money supply is 10%, of velocity of money circulation 1%, of real GDP 3%, what is the inflation rate? (b) The nominal interest rate is 7%, the inflation rate is 5%, what is the real interest rate?