Essay
In a small economy, the level of nominal GDP is $4,000,000. The current level of money supply is $500,000. Velocity is stable, and the growth rate of real GDP is expected to be 2% over the next year. Money is expected to grow at 3%. Use this information to answer the following questions:
A) What is the velocity of money circulation in this economy?
B) What is the expected inflation rate in this economy?
Correct Answer:
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A) velocity = nominal GDP ÷ money supply...View Answer
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Correct Answer:
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