Calculate the nominal gdp, Macroeconomics

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.

 

Posted Date: 3/13/2013 2:25:27 AM | Location : United States







Related Discussions:- Calculate the nominal gdp, Assignment Help, Ask Question on Calculate the nominal gdp, Get Answer, Expert's Help, Calculate the nominal gdp Discussions

Write discussion on Calculate the nominal gdp
Your posts are moderated
Related Questions
Macro Economics 1. How was the Classical Theory of interest role criticized by Keynes? 2. Illustrate the barter system that was used in early times in lieu of money. 3.


An investor has a series of three $15,000 payments expected to be realized at the end of years three, four, and five. Calculate the present value P at time zero and the correspondi

George has been selling 5,000 T-shirts per month for $8.50. When he increased the price t0 $9.50 he sold only 4,000 T-shirts. What is the demand elasticity? If his marginal cost is

Under what conditions does the text explain that monetary policy is neutral? If it is neutral under these conditions, why is it still an important economic policy tool? Your answer

The benefits of capitalism are that the governments have limited control over other business, which lets business compete.

what is real and norminal interest rates?

Q. Overall effect of a change in real wages? The supply of labor The supply of labour L S is assumed to be positively related to the real wage W/P

Examine the efficiency of quanttitative credit control instrument

The tax-adjusted Multiplier and the balanced budget Multiplier are explained below: Taxes act as drag on the multiplier effect of government expenditure, because they represent