What would inflation rate be if money supply was decreased

Assignment Help Econometrics
Reference no: EM13221559

Use the quantity theory of money equation for this problem. Suppose the money supply is $550 billion, nominal output is 9 trillion, and real output is 5 trillion. What is the velocity? If the velocity is fixed, what would the inflation rate be if the money supply was decreased $530 billion? Is your answer consistent with the classical dichotomy? Explain. Suppose that when the money supply changed from $550 billion to $530 billion, real output falls by 2%. Now what will happen to inflation rate?

Reference no: EM13221559

Questions Cloud

Calculate labor productivity for the initial situation : Gibson Products produces cast bronze valves for use in offshore oil platforms. Currently, Gibson produces 1600 valves per day. The 20 workers at Gibson work from 7 a.m. until 4 p.m.
Discuss the events or uncertainties that are most likely : Discuss the events or uncertainties that are most likely to cause trouble in the implementation of your recommendations and how you would react to them if they were to occur.
How much money to spend on advertising : George needs help to decide how the dollar amount of grapes to buy, how much money to spend on advertising, and how many bottles to sell of each wine in each year, such the profit earned is maximized.
Compute the molality of a solution : Calculate the molality of a solution that contains 51.2 g of naphthalene, C10H8, in 500. mL of carbon tetrachloride. The density of CCl4 is 1.60 g/mL.
What would inflation rate be if money supply was decreased : If the velocity is fixed, what would the inflation rate be id the money supply was decreased $530 billion Is your answer consistent with the classical dichotomy Explain. Suppose that when the money supply changed.
Define what is the mole fraction of hexane : A solution contains 10.0 g pentane, C5H12, 10.0 g hexane, C6H14 and 10.0 g benzene, C6H6. What is the mole fraction of hexane?
Define what is the mole fraction of methanol : If 8.32 grams of methanol, CH3OH, are dissolved in 10.3 grams of water, what is the mole fraction of methanol in the solution?
Explain directly influenced by the polarity of the compond : Name 4 properties of a compound that is directly influenced by the polarity of the compond. And state the 2 most important factors that affect the
Compute the value of the test statistic : The amount of water consumed each day by a healthy adult follows a normal distribution with a mean of 1.54 liters. A sample of 10 adults after the campaign shows the following consumption in liters: 1.35 1.68 1.76 2.00 1.84 1.84 1.50 1.82 1.86 1.6..

Reviews

Write a Review

Econometrics Questions & Answers

  Find the estimated elasticity of demand

A customer has provided information on the value of cars, the price of gasoline, the quantity of new cars sold in United States. Gross Domestic Product per capita is also observed.

  Calculate the interest on loan for each year

A machine has an initial cost of $500,000, and was estimated to have a salvage value of $30,000 at the end of its 7 years useful life. The machine is expected to generate annual net savings of $125,000. A loan of $200,000 at 7% interest will help ..

  Find what is the predicted purchase behavior

Increasing customer satisfaction typically results in increased purchase behavior. For many products, there is more than one measure of customer satisfaction. In many of these instances, purchase behavior can increase dramatically with an increase..

  How many years it will take an investment to triple itself

compare the interest rate earned on $15000 for 25 years at 7% simple interest with the amount of interest earned if interest were compounded annually SIMPLE INTEREST: I=iPN=(0.07)($15,000)(25) I=$26,250 COMPOUND INTEREST I=P[(1+i)^N-1] I=$15,000[(1..

  What are the equilibrium price and quantity

What are the equilibrium price and quantity e. What happens to equilibrium price and quantity if other things remain the same as in part d but income increases to $52,000 f. What happens to equilibrium price and quantity if other things remain the ..

  Calculate exact values for required reserves

Suppose banks are required by law to hold 5% of their deposits in reserves and total deposits are $100 million, but banks choose to hold a total of 20% of their deposits in reserves because loans are riskier and potentially unprofitable. Calculate..

  What should a properly designed piece-rate contract

Factory workers at each plant have the same characteristics (e.g., skills, alternative employment opportunities, level of income, risk aversion, etc.). The quality of a toothbrush produced is easy to supervise but the effort exerted by a worker is..

  Solve these equations for the equilibrium values of c

Assume that the following equations characterize a large open economy: (1) Y = 5,000 (2) Y = C + I + G + NX (3) C = 1/2(Y - T) (4) I = 2,000 - 100r (5) NX = 500 - 500e (6) CF = -100r (7) CF = NX (8) G = 1,500 (9) T = 1,000where NX is net exports, CF ..

  Compare the relative productivity with the wage ratio

US Output: 100 units Labor: 20 workers Wages: $3 Exports:$90 UK Output: 50 units Labor: 20 workers Wages:$2 Exports: $45 1.) Compare the relative productivity with the wage ratio 2.) Then calculate the ratio of the two exports.

  Would george be just as well off consuming 200r and 400b

the per-unit prices of broccoli (B) and pork rinds (R) equal to $2 and $1 respectively, a consumer George, with an income of $1,000 purchases 400R and 300B. At that point, the consumer's MRSBR = 2R/1B. Does this mean that George would be just as w..

  How many firms must there be for the cournot equilibrium

Suppose there is a boombox market that has the following demand curve: P=400-20Q and there are N firms, each with a marginal cost of 30. How many firms must there be for the cournot equilibrium price to go below 40

  Determine what is the percentage change in output

Assume Firm Y's production function is given by the following Cobb Douglas equation: Q = 0.5 x L0.6 x K0.5 where L denotes labor and K denotes capital. a. Does the production function exhibit increasing, decreasing or constant returns to scale.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd