Calculate the nominal gdp, Macroeconomics

Assignment Help:

Answer the following questions for a hypothetical economy whose situation in year 1 was as follows: M = $800 billion; long-term annual growth of real GDP = 3%; V = 4.

The banking system has no excess reserves and the reserve requirement is 10%.

Assume that V is constant and the economy is at full employment.

(a) What is the nominal GDP in year 1?

(b)If the Federal Reserve adheres to the monetarist rule of increasing the money supply by a constant 5% using open-market operations, explain whether it will have to buy or sell bonds and by how much between years 1 and 2 in order to meet the rule.

(c) Based on the information given above and calculated in (b) above, what will be the nominal GDP in year 2?

(d)Is this change greater or less than the change in real GDP? Explain.

 


Related Discussions:- Calculate the nominal gdp

Weights of a sample of five boxes, The weights of a sample of five boxes be...

The weights of a sample of five boxes being sent by FedEx are: 48, 24, 28, 12, and 40. (a) Compute the range. (b) Compute the mean deviation. (c) Compute the standard devi

Accounting system-example i, ACCOUNTING SYSTEM-EXAMPLE I  Consider a ve...

ACCOUNTING SYSTEM-EXAMPLE I  Consider a very simple economy. It consists of a. A number of households. b. A single productive organization, a 'firm' - say the Jam Corpora

Interest rate, assessment of interest rate in the economy of south africa, ...

assessment of interest rate in the economy of south africa, unemployment

Particular group of mutual funds, Suppose the returns of a particular group...

Suppose the returns of a particular group of mutual funds are normally distributed with a mean of 9.1% and a standard deviation of 5.1%. If the manager of a particular fund wants h

How large is the money supply, Assume that the following data describe the ...

Assume that the following data describe the condition of the banking system: Total Reserves                         $200 billion Transactions Deposited          $700 billion

Market structures, illustrate and discuss the market structures competitive...

illustrate and discuss the market structures competitiveand non competitive for price determination

Explain about quantity theory of money, Q. Explain about Quantity theory of...

Q. Explain about Quantity theory of money? One of the main elements of the classical model is quantity theory of money. Quantity theory of money connects three important variab

Define the fisher equation, Define the Fisher equation Fisher equation ...

Define the Fisher equation Fisher equation is: Money supply (stock of money) x velocity of circulation of money = price level x total transactions in the economy or     MV =

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd