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Calculate the change in the money supply

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  1. Use the equation of exchange, calculate the value of real output (Q), or real transactions (T) in an economy where M=$200 billion, V=2.4 and P=1.2?
  2. If the value of full employment output (Q) or real transactions (T) in the economy above is $451 billion, calculate the change in the money supply (M) needed by the Fed to bring this economy to full employment output if V=2.5 during the economic booms. Assume that there is no increase in the price level when the economy reaches full employment.

Reference no: EM132445394

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