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Money supply = RM 500 billion, Nominal GDP = RM 10 trillion, Real GDP = RM 5...

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Economics

Moneysupply = RM 500 billion, Nominal GDP = RM 10 trillion, Real GDP =RM 5 trillion.
A.What is the price level?
B.What is the velocity of money?
C.What will happen to nominal GDP and the price level on the nextyear if the economy’s output of goods and services rises 5%.(Assuming that velocity and the money supply are constant)
D. Inorder to keep the price level stable on the following year, Whatshould the central bank do in regards to the money supply?
E.What should the central bank do in regards to the money supply onnext year if it wants inflation of 10 percent?

Answer & Explanation Solved by verified expert
3.7 Ratings (674 Votes)
According to Quantity theory of money QTM MV PY Where M is money supply V is the velocity P is the price level Y is the real GDP PY is the nominal GDP Given information M 500 billion 05 trillion PY 10 trilion Y 5 tillion A Nominal GDP Price level Real GDP 10 trillion Price    See Answer
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