The velocity of circulation is constant, real GDP is growing at 2 percent a year, the real interest rate is 2 percent a year, and the nominal interest rate is 6 percent a year. Calculate the inflation rate, the growth rate of money, and the growth rate of nominal GDP. The inflation rate is percent a year.
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- If the quantity of money grows at 7 percent a year, the velocity of circulation is constant, and real GDP grows at 6 percent a year, what is the inflation rate? The inflation rate is ____ percent a year Thank youThe velocity of circulation is growing at 5 percent a year, the real interest rate is 5 percent a year, the nominal interest rate is 10 percent a year, and the growth rate of real GDP is 3 percent a year. Calculate the inflation rate, the growth rate of money, and the growth rate of nominal GDP. stion Heip The inflation rate is percent a year. Enter your answer in the answer box and then click Check Answer. 2 parts remaining Clear All Check Answer javascript:doExercise(8); MacBook At DII 888 F12 吕0 F9 F10 F7 F8 F5 F6 F4 esc F2 F3 F1 $ % & # dele 1 2 3 4 5 T Y U Q W E tab K F G A S caps lock х C V shift command optic Bommand 身 I RThe velocity of circulation is constant, real GDP is growing at 4 percent a year, the real interest rate is 3 percent a year, and the nominal interest rate is 4 percent a year. Calculate the inflation rate, the growth rate of money, and the growth rate of nominal GDP. The inflation rate is percent a year.
- What is the inflation rate? Year Money supply GDP Assume that the velocity of money is constant. (Write your answer in percentage. If your answer is 0.0222, write 2.22.) 2015 1,200 12,000 2016 1,220 12,550Suppose the nominal interest rate on car loans is 11% per year, and both actual and expected inflation are equal to 4%. Complete the first row of the table by filling in the expected real interest rate and the actual real interest rate before any change in the money supply. Time Period Nominal Interest Rate (Percent) Expected Inflation (Percent) Actual Inflation (Percent) Expected Real Interest Rate (Percent) Actual Real Interest Rate (Percent) Before increase in MS 11 4 4 Immediately after increase in MS 11 4 6 Now suppose the Fed unexpectedly increases the growth rate of the money supply, causing the inflation rate to rise unexpectedly from 4% to 6% per year. Complete the second row of the table by filling in the expected and actual real interest rates on car loans immediately after the increase in the money supply (MS). The unanticipated change in inflation arbitrarily benefits (a. borrows, b. lenders). Now consider…Suppose that in the country of Eurasia, the velocity of money is constant. Real GDP grows at a rate of 2 percent per year, the money stock grows by 8 percent per year and the nominal interest rate is 9 percent. What is a. The growth rate of nominal GDP? b. The inflation rate? c. The real interest rate?
- The government of a country increases the growth rate of the money supply from 5 percent per year to 50 percent per year. a) What happens to prices? b) What happens to nominal interest rate? c) Why might the government be doing this?If the velocity of circulation is growing at 1 percent a year, the real inter- est rate is 2 percent a year, the nominal interest rate is 7 percent a year, and the growth rate of real GDP is 3 percent a year, calculate the inflation rate, the growth rate of money, and the growth rate of nominal GDP.Inflation – Work It Out: Question 1 In the country of Orcam, the velocity of money is constant. Real GDP grows by 5 percent per year, the money stock grows by 12 percent per year, and the nominal interest rate is 12 percent. Calculate the growth rate of nominal GDP. a. Calculate the growth rate of nominal GDP. growth rate of nominal GDP:
- An economy is at full employment. The quantity of money is growing at 8.3 percent a year, the nominal interest rate is 9.5 percent a year, real GDP is growing at 5.0 percent a year, and the inflation rate is 3.1 percent a year. What is the change in the velocity of circulation? Why might it be changing? The velocity of circulation is _______. A. increasing by 3.1 percent a year B. decreasing by 0.2 percent a year C. increasing by 0.2 percent a year D. constantAdditional Problem 7 The velocity of circulation is constant, real GDP is growing at 2 percent a year, the real interest rate is 3 percent a year, and the nominal interest rate is 4 percent a year. Calculate the inflation rate, the growth rate of money, and the growth rate of nominal GDP. Question Help The inflation rate is percent a year. Enter your answer in the answer box and then click Check Answer. parts remaining Clear All Check Answer MacBock Al DII D 吕0 888 F12 F10 F7 F8 F9 F5 F6 F4 esc F2 F3 F1 & ! @ # $ 4 1 Y Q W E tab K F G S caps lock B N M C V * 00 R %24