Make use of the quantity theory of money to solve the following problem
If the Fed has an inflation target of 2% and the velocity of money is constant, by how much should it increase the money supply each year if economic growth is expected to average 3%?
Since the percent change in the money supply equals the percent change in real GDP plus inflation, the money supply should grow by 2% + 3% = 5%.
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The above figures show the market for HD televisions. If research is published showing that watching HD television shows causes eye damage, then which figure shows the effect of this change?
A) Figure A B) Figure B C) Figure C D) Figure D E) None of the figures represent this change.
Your grandfather tells you that he earned $7,000/year in his first job in 1961. You earn $35,000/year in your first job in 2016. You know that average prices have risen steadily since 1961. You earn
A) more than 5 times as much as your grandfather in terms of real income. B) less than 5 times as much as your grandfather in terms of real income. C) less than 5 times as much as your grandfather in terms of nominal income. D) 5 times as much as your grandfather in terms of real income.