Business, 11.06.2021 14:50 luischavolla10

2. Suppose that this year’s money supply is $500 billion, nominal GDP is $10 trillion, and real GDP is $5 trillion. a. What is the price level? What is the velocity of money?
b. Suppose the velocity is constant and the economy’s output of goods and services rises by 5% each year. What will happen to nominal GDP and the price level next year if the FED keeps the money supply constant?
c. What money supply should the FED set next year if it wants to keep the price level constant?
d. What money supply should the FED set next year if it wants inflation of 10%?

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2. Suppose that this year’s money supply is $500 billion, nominal GDP is $10 trillion, and real GDP...