Make use of the quantity equation to answer the following problem. If the Fed increases the money supply by 4%, velocity increases by 1%, and economic growth is 3%, by how much will the price level increase?

What will be an ideal response?


Since the percent change in the money supply plus the percent change in velocity equals the percent change in real GDP plus the percent change in the price level, the price level will increase by 2% (4% + 1% - 3%).

Economics

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Keynesian economists believe that

a. since both V and Q are constants, the equation of exchange becomes the quantity theory of money, which explains prices b. the quantity theory of money is proof that money cannot influence how much we produce, but does influence the prices of the goods we produce c. even though velocity isn't constant, it is predictable d. if a change in M occurs, it may not only affect P, but also and at the same time affect Q e. the velocity of money is unchanging, regardless of changes in M, P, or Q

Economics

The unemployment rate:

A. is measured by the number of people who are unemployed divided by the labor force. B. measures what percentage of our labor force is currently looking for a job and can't find one. C. is never zero. D. All of these are true.

Economics

OutputTotal RevenueTotal Cost0$0$501407428094312011741601425200172Refer to the above table. The marginal cost of the third unit of output is:

A. $23. B. $24. C. $25. D. $20.

Economics

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. An increase in the price of a product that is a complement to X will

What will be an ideal response?

Economics