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
The conventional wisdom has been that inflation is bad for the economy. If our inflation is running higher than our trading partners' inflation, according to this argument, ou
Antitrust authorities at the Federal Trade Commission are reviewing your company’s recent merger with a rival firm. The FTC is concerned that the merger of two rival firms in
Suppose the government increases both taxes and government purchases by $10,000. Assuming that the marginal propensity to consume is 0.75, calculate the change in private savi
Costs for maintenance of buildings at an industrial complex are expected to be $2000 in year three,$2500 in year four and amounts decreasing by $200 per year thereafter throug
Suppose u(c, c') = ln c+β ln c' , there exists N consumers and each consumer lives for 2 periods. In each period they receive an endowment y, y' and are taxed t, t'. Derive th
Conduct a light research on the role of emotion in negotiation process, and the effect it has on the outcome of the negotiation. Does emotion delay the negotiation process, or
Intel made large loyalty payments to HP in exchange for buying most of their chips from Intel instead of rival AMD. AMD sued Intel under the antitrust laws, and Intel settled
Identify and briefly explain three specific topics or ideas that you found to be the most important and/or most interesting. Be specific, and explain. Do you plan to apply any