P Pandora Internet Radic 41 x CengageBrain My Home x O Aplia: Student Question x
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P Pandora Internet Radic 41 x CengageBrain My Home x O Aplia: Student Question x Aplia: Stud Questi x G 4. Velocity and the quanti X C Courses aplia.co ctarasev-00998 quiz action takeQuiz&quiz; probGuid-Q4PLCOA801010000002af6a5b00b0000 880 econ 2301 fall 2015 aplia Personalized Reviews Discussion Money, Growth, and inflation Graded Assignment I Read Chapter 17 I Back to Assignment Due Monday 10.05.15 at 11:00 PM Average: 11 Attempts: 4. Velocity and the quantity equation Consider a simple economy that produces only cell phones. The following table contains information on the economy's money supply, velocity of money, price level, and output. For example, in 2012, the money supply was $400, the price of a cell phone was $5.00, and the economy produced 800 cell Fill in the missing values in the following table, rounding to the nearest cent when necessary. Quantity of Money Price Level Quantity of Output Nominal GDP Year (Dollars) Velocity of Money (Dolla (Cell phone (Dollars) 400 00 800 404 800 The money supply grew at a rate of from 2012 to 2013. Since cell phone output did not change from 2012 to 2013 and the velocity of the change in the money supply was reflected in changes in the price level. The inflation rate from 2012 to 2013 was Grade It Now Save&Cotinue; Amber L Siembida Customer Support Sign out S9:2S 4:39 PM 10/5/2015Explanation / Answer
2012
GDP = price level x quantity of output
= 5 x800
=4000
Velocity of money = GDP/ quantity of money
= 4000/400
=10
2013
GPD = velocity x quantity of money
= 10x404
= 4040
Price level = GDP/ quantity of output
=4040/800
=5.05
Growth in money supply = (quantity of money2013/ quantity of money2012)-1
= 404/400 -1
=1%
Velocity of money also remained constant.
The change in the money supply was reflected by positive change in price level.
Inflation rate = (price level 2013/ price level 2012) -1
= (5.05/5) -1
= 1%
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