Elucidate what money supply should the fed set
Course:- Business Economics
Reference No.:- EM1349686

Assignment Help
Assignment Help >> Business Economics

Suppose that in year 2008, the money supply is $400 billion, nominal GDP is 9 trillion, and real GDP is $4 trillion.

(a) What is the price level? What is the velocity of money?

(b) Suppose the velocity is constant and the economy's output of goods and services rises by 5 percent each year. What will happen to nominal GDP and the price level next year if the Fed keeps the money supply constant?

(c) Elucidate what money supply should the Fed set in year 2009 if it wants to keep the price level stable?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
Suppose you are appointed head of the energy department of the city or town where you grow up, and you are asked to come out with a sustainable long-term strategy that that wi
Present a thorough analysis of economic growth. What are the factors that contribute to economic growth? Provide your perspective as to what our society can do to enhance econ
Select an article from The Wall Street Journal or some other business or economic periodical that relates to the economic topic(s) covered in Workshop Three. Prepare a one to
Does either country have an absolute advantage in the production of wheat or beef? Explain. What is the opportunity cost of wheat in each country? What is the opportunity cost
Using the sameproduct example above, analyzing how the risk tolerance factors play in supplying the good or service and how this should influence management's decisions.
If a firm is producing where MPx/Wx > MPy/Wy, where x and y are the two inputs to theproduction process, what can the firm do to reduce costs but maintain the same output? Exp
A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 110 - 0.25P, and the marginal
Given data for Econland: Adult Population = 180 million; Unemployment Rate = 7.5%; NILF = 56 million. Compute the participation rate in Econland. Compute the employment rate i