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describeing Quantity and institutional theory of inflation with given information.

1. Answer the following problems using the equation of exchange:

a. Nominal GDP is $10,000, the money supply is $5,000. What is the velocity of money?

b. The velocity of money is 4 and the money supply is $2,000. What is nominal GDP?

c. Suppose the velocity of money is constant and the money supply increases 8%. What is the increase in nominal GDP?

2. describe why are economists which support the quantity theory of money more likely to support a monetary policy rule than economists who support institutional theories of inflation? (describe both groups\' belief about the cause of inflation in your answer.)

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M922628

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