Suppose that this year's money supply is $50 billion, nominal GDP is $1 trillion, and real GDP is $500 billion. (20 Marks)
1. What is the price level? What is the velocity of money?
2. Suppose that velocity is constant and the economy's output of goods and services rises by 5 percent each year. What will happen to nominal GDP and the price level next year if the bank of Canada keeps the money supply constant?
3. What money supply should the Bank of Canada set next year if it wants to keep the price level stable?
4. What money supply should the Bank of Canada set next year if it wants inflation of 10 percent?
Recently Asked Questions
- Why do you think we are so often reluctant to show our religion to others? Why might people of certain faiths the more hesitant than others?
- y=k^(1/3)l^(1/3)h^(1/3) does the production function in this question follow the neo-classical theory of income distribution discussed in your course textbook?
- i need a 5 paragraph essay on the following question please 1)Compare and contrast the analysis of Middle Eastern cultures based on stereotypes and analysis