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23 Nov 2019

If the velocity of circulation is growing at one percent a year, the real interest rate is two percent a year, the nominal interest rate is seven percent a year, and the growth rate of real GDP is three percent a year, calculate the inflation rate, the growth rate of money, and growth rate of nominal GDP.

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Related questions

11.Suppose that for a given year money growth is 10 percent, real GDP growth is 8 percent, and velocity is constant. According to the growth version of the quantity equation, the inflation rate would be
Select one:
a. -2 percent.
b. 1.25 percent.
c. 2 percent.
d. 18 percent.

12.An inflation rate greater than 50 percent per month is known as
Select one:
a. disinflation.
b. stagflation.
c. deflation.
d. hyperinflation.

13.If nominal wages increase by 5 percent while real wages fall by 1 percent, the inflation rate must be
Select one:
a. 1 percent.
b. 4 percent.
c. 5 percent.
d. 6 percent.

14.When the expected rate of inflation is added to the real interest rate, the result is called the
Select one:
a. preferred rate.
b. nominal interest rate.
c. adjustment rate.
d. differential rate.

15.When a government has a budget deficit and has reduced its spending, what other step can be taken to generate more revenue, besides issuing government bonds?
Select one:
a. reduce unemployment
b. raise interest rates
c. increasing exports
d. raise taxes

The following table gives nominal GDP and the price index for two years.Ā 

Ā 

YEAR NOMINAL GDP REAL GDPĀ  POPULATIONĀ 
2010 5600 4667 100
2011 6440 5031 Ā 105
Ā 
From the table, determine the per capita real GDP for each year, the growth rate of real GDP between 2010 and 2011, and the growth rate of per capita real GDP.Ā 
What is the per capita real GDP for each year, theĀ growth rate of real GDP between 2010 and 2011, was ________and the growth rate of per capita real GDP was ________.
Ā 

12. Problems and Applications Q6 Consider the following data on U.S. GDP: Year Nominal GDP GDP Deflator (Billions of dollars) (Base year 2005) 2012 15,676 115.4 2002 10,642 92.2 The growth rate of nominal GDP between 2002 and 2012 was , and the growth rate of the GDP deflator between 2002 and 2012 was (Hint: The growth rate of a variable over an -year period is calculated as ) Measured in 2005 prices, real GDP was in 2002 and in 2012. The growth rate of real GDP between 2002 and 2012 was The growth rate of nominal GDP between 2002 and 2012 was than the growth rate of real GDP.

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