a) What is the price level? what is the velocity of money?
b) If the fed keeps their money constant and the velocity is constant and the output of goods and services increase by 5% a year.
c) What will happen to nominal GDP and the price level of next year?
will this lead to a higher nominal GDP and GDP deflator?
d) What money supply should the fed set next year for stability?
-What money supply should the fed set next year if it wants inflation of 10%?
This question was asked on May 13, 2011.
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