Let’s consider a hypothetical economy where this year’s money supply is Tk.100, nominal GDP is Tk. 40000 and real GDP is Tk. 5000. a) What does the quantity theory of money say? b) Calculate the price level. c) Calculate the velocity of money. d) Suppose the central bank changes the money supply so that the new money supply is Tk. 500, calculate the new price level.

Let’s consider a hypothetical economy where this year’s money supply is Tk.100, nominal GDP is Tk. 40000 and real GDP is Tk. 5000. a) What does the quantity theory of money say? b) Calculate the price level. c) Calculate the velocity of money. d) Suppose the central bank changes the money supply so that the new money supply is Tk. 500, calculate the new price level.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter13: Monetary Policy

Section: Chapter Questions

Problem 6E

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