Suppose Y = 100, P = 80, and V = 3.2. If Y rises to 105, and the ...

[ss2343]

Suppose Y = 100, P = 80, and V = 3.2. If Y rises to 105, and the inflation rate is 10 percent, what is the new value of M?
 
  What will be an ideal response?

Question 2

One factor which did not influence the levels of real output and employment in the classical system was the
 
  a. stock of capital.
  b. level of technology.
  c. the price level.
  d. size of the labor force.

[mmj22343]

Answer to Question 1

105  88 = 9,240 = M  3.2. M = 2,887.5. Equivalently, 100  80 = M  3.2, so M = 2,500. Since P  Y rises from 8,000 to 9,240, an increase of 15.5, M must rise by 15.5 = 2,500  1.155 = 2,887.5

Answer to Question 2

C

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TYSM

[cpetit11]

Gracias!