Question
In: Economics
According to the quantity theory of money, what must the growth rate of the money supply...
According to the quantity theory of money, what must the growth rate of the money supply be given the following information?
The growth rate of real GDP is
2.3%.
The growth rate of nominal GDP is
6.5%.
The nominal interest rate is
7.0%.
The real interest rate is
2.8%.
The money supply (M2) is
$11438(in billions)
According to the quantity theory of money, the growth rate of the money supply must be
nothing%.
(Round
your answer to the nearest
tenth.)
According to the quantity theory of money, what is the inflation rate?
Use the information given above and calculate the inflation rate.
According to the quantity theory of money, the inflation rate is
nothing%.
(Round
your answer to the nearest
tenth.)
Solutions
Expert Solution
Solution:-
(a) Calculate the growth rate of the money supply:-
Growth rate of the money supply = Inflation + Growth rate of real GDP
= (7 - 2.8) + 2.3
= 4.2 + 2.3
= 6.5%
(b) Calculate the inflation rate:-
Inflation rate = Nominal Interest Rate – Real Interest Rate
= 7 – 2.8
= 4.2%
Rahul Sunny answered 2 years agoRelated Solutions
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