Suppose money supply (M) = $500, real GDP (Y) = $1,000, and nominal GDP = $5,000. Calculate the value of velocity and the price level.
A) V=2;P=1
B) V=4;P=5
C) V=10;P=5
D) V=10;P=1
Ans: C) V=10;P=5
Economics
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Assume a simplified banking system in which all banks are subject to a uniform reserve requirement of 20 percent and checkable deposits are the only from of money. A bank that received a new checkable deposit of $10,000 would be able to extend new loans up to a maximum of:
a. $2,000 b. $8,000. c. $9,000 d. $10,000.
Economics
If M increases faster than V decreases: a. nominal GDP increases
b. nominal GDP decreases. c. nominal GDP stays the same. d. there is an indeterminate effect on nominal GDP.
Economics