What money supply should the fed

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Reference no: EM1315483

Q. Assume which in yr 2008, the money supply is $400 billion, nominal GDP is 9 trillion also real GDP is $4 trillion.

(a)Illustrate what is the price level? Illustrate what is the velocity of money?

(b)Assume the velocity is constant also the economy's output of goods also services rises by 5 percent each yr. Illustrate what will happen to nominal GDP also the price level next yr if the Fed keeps the money supply constant?

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

Reference no: EM1315483

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