If the price level increases by 0.2 percent for every $100 billion increase in the money supply, by how much might prices rise if the Fed increases total reserves by $80 billion and the reserve requirement is 0.05?

Prise rise = 3.2%

Explanation:

Given the increase in price level = 0.2%

The increase in total reserve by the Fed = $80

Reserve requirement = 0.05

Increase in money supply ($ billion) = Increase in reserves / Reserve ratio

Increase in money supply = 80 / 0.05 = 1,600

Increase in price level = (Increase in money supply / 100) x 0.2%

Increase in price level = (1,600 / 100) x 0.2%  

Increase in price level = 3.2%

answer; i believe that (pastoral society) is the correct answer;

month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23