Business, 25.03.2020 04:39 2Pallie2

Suppose that this year's money supply is $600 billion, nominal GDP is $15 trillion, and real GDP is $3 trillion. The price level is , and the velocity of money is . Suppose that velocity is constant and the economy's output of goods and services rises by 3 percent each year. Use this information to answer the questions that follow. If the Fed keeps the money supply constant, the price level will , and nominal GDP will . True or False: If the Fed wants to keep the price level stable instead, it should increase the money supply by 3% next year. True False If the Fed wants an inflation rate of 10 percent instead, it should the money supply by % . (Hint: The quantity equation can be rewritten as the following percentage change formula:

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Suppose that this year's money supply is $600 billion, nominal GDP is $15 trillion, and real GDP is...

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