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Monetary Theory and Policy. Use the equation of exchange to answer the following questions and assume that the velocity of money is fixed at V = 7.5 throughout this problem.
The equation of exchange is × = × . The price level given in this equation is the GDP price index discussed on page 110 of the textbook (many people call it the GDP price deflator). In order to use the GDP price index in this equation, we need to divide it by 100 (its base year value). So we use a price level of 1.25 instead of 125, i.e. 1.25 = A price level of 112 would be 1.12 in this equation, etc… If this causes any confusion, please let me know.
a. Suppose that the economy is in long-run equilibrium. If the money supply is $2 trillion and the price level is 1.25, show that potential output is $12 trillion.
b. Again, suppose the Fed has increased the money supply by 10% to $2.2 trillion, what happens to the price level after the economy has adjusted back to full employment? Does it go up or down? What is the new price level? Show your work.
Is the United States Internal Revenue Service (IRS) the only service in mandating such pricing of intra company transfers? Would the concept of an arm’s-length price resolve the measurement issue in pricing intra company transfers? Why or why not?
____ after WWII because Britain wanted to go the path towards more ____.
An economy adjusts on its own to close a recessionary gap because there is
How many workers should the firm hire if the price of the output is $10? Suppose the price of the output falls to $7.50. Illustrate what do you think would be the short-run impact on the firmâ??s production.
Patrick chooses to use his time ‘free-time’: (a) working out or (b) reading. Patrick currently has 20 hours a week to allocate to these two activities. It takes Patrick 1.5 hour to work out and .5 hours to read. Patrick enjoys both activities, Draw P..
q1. bob consumes two commodities x and y say chocolate and classical music. more y never hurts but in order to enjoy y
Farmer Brian has 3 acres of land which he farms efficiently. Each acre can support 20 apple trees. However the 3 acres differ in their ability to support orange trees. what would be the opportunity cost of growing another apple tree?
Using the data from HW 3 Data.xlsx, forecast 2016 sales for Dynamo Publishing (the first worksheet tab, DYNAMO PUBLISHING) with a smoothing parameter of: (a) α=0.5 (b) α=0.75 (c) Which of these two α’s perform better for minimizing total error? Smoot..
There are 2 fishermen, Zach and Jacob, who fish along a certain coast. Both would benefit if lighthouses were built along the coast where they fish. The marginal cost of building each additional lighthouse is $25. The demand curves for lighthouses ar..
Newspaper vending machines are designed so that once you have paid for one paper; you have access to all the papers in the machine and could take multiple papers at a time. However, other vending machines dispense only one item (the item you bought)...
"Equities" is another word for
Illustrate what are the major similarities also differences among the name-your-own-cost model also the electronic tendering system.
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