Long-run equilibrium-growth rate of the velocity of money

Assignment Help Business Economics

Reference no: EM13981525

Assume that wages and prices are sticky and that we start at a long-run equilibrium. Assume that at this initial point, the growth rate of the money supply is 6%, the growth rate of the velocity of money is 2% and that the real economic growth rate is 4%.

Now assume that oil prices increase. After the increase in oil prices, the inflation rate in the economy is 9%. Now assume that the federal government decides to increase government spending in order to combat the rise in oil prices. After the increase in government spending the total spending growth is now 14%.

1. After the increase in government spending, what is the growth rate of the velocity of money?

Reference no: EM13981525

Questions Cloud

Two firms constitute the entire doghouse industry : Two firms constitute the entire doghouse industry. One has the long-run cost function c1(y) = 3 + 4y 2/3 for y > 0 and c1(0) = 0, and the other has the long-run cost function c2(y) = 10 + y 2/10 for y > 0 and c2(0) = 0. If no new firms can enter the ..

Assigned the responsibility for selling your firms products : If you were assigned the responsibility for selling your firms products on eBay, how would you achieve the highest price? Give five specific ideas. Within your explanation please identify the type of product(s) you plan to sell. You should consider i..

Sensitivity analysis of the probabilities of the payoffs : Show how a Monte Carlo simulation could facilitate a sensitivity analysis of the probabilities of the payoffs.

Increase in the supply of foreign exchange : Suppose that there is an increase in the supply of foreign exchange due to an inflow of foreign investment in a flexible-rate system. Explain how this would affect the balance on current account, being careful to explain any assumptions about the for..

Long-run equilibrium-growth rate of the velocity of money : Assume that wages and prices are sticky and that we start at a long-run equilibrium. Assume that at this initial point, the growth rate of the money supply is 6%, the growth rate of the velocity of money is 2% and that the real economic growth rate i..

Find the total energy : Let the total energy of signal x(t) be denoted by Ex. Find the total energy of y(t) = Ax(at + b) in terms of Ex, where A, a, b are some constants and a does not = 0.

Optimistic about the success of one project : How can you incorporate his uncertainty about the probabilities into your simulation? Now suppose he says that if he is optimistic about the success of one project, he is likely to be optimistic about the others as well. For your simulation, this m..

What work is done by that spring in accelerating the car : When the trigger of the launcher is pulled, the spring accelerates the 50-g car horizontally to x= 0, where the car loses contact with the spring and exits the launcher. What work is done by that spring in accelerating the car?

What is the growth rate of the money supply : Now assume that oil prices increase. After the increase in oil prices, the inflation rate in the economy is 9%. Now assume that the federal government decides to increase government spending in order to combat the rise in oil prices. After the increa..

User Account

All Pages