ECON 250W Study Guide - Final Guide: Nominal Interest Rate, Gdp Deflator, Real Interest Rate
20 Jun 2019
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This week"s questions are based on our readings in chapter 4 of the textbook about the velocity of money: the table below shows actual data for canada for the years 2003 and 2007. 116. 4: complete the table by calculating the values of velocity (v) in 2003 and 2007. Interpret the meaning of the values which you have calculated: you will notice that velocity showed a small decline from 2003 to 2007. Explain: in a certain economy velocity has been decreasing by approximately 1. 5 percent per year. The long-run average rate of economic growth in the economy is 4 percent per year. The central bank is committed to a policy of inflation targeting with a current annual inflation target of 2 percent. Explain making use of an equation linking the variable values described: suppose you lend for a year at a nominal interest rate of 6 percent (i = 0. 06).
