6. In a classical economy, the velocity of money is 100 (constant). a. If output is 1000 units and the money supply $2000, what is the price level? Explain. equation of money. b. If the real GDP grows by 3% per year, the money stock grows by 5% per year, and the real interest rate is 2%, then what is the nominal interest rate?

6. In a classical economy, the velocity of money is 100 (constant). a. If output is 1000 units and the money supply $2000, what is the price level? Explain. equation of money. b. If the real GDP grows by 3% per year, the money stock grows by 5% per year, and the real interest rate is 2%, then what is the nominal interest rate?

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: Money Growth And Intlation

Section: Chapter Questions

Problem 2CQQ

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