Suppose that the velocity of money is stable, 4% real economic growth is occurring, the rate of inflation is 4%, unemployment is 5.3%, and the marginal propensity to save is 3%.

By how much is the money supply growing? Enter your answer as a percentage.

Question

Business

Kash Schmitt

23 November, 08:42

Suppose that the velocity of money is stable, 4% real economic growth is occurring, the rate of inflation is 4%, unemployment is 5.3%, and the marginal propensity to save is 3%.

By how much is the money supply growing? Enter your answer as a percentage.

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Answers (1)

Know the Answer?

Rory Hayes · Answer 1

8%

Explanation:

Growth in money supply + Growth in velocity = Inflation + Real economic growth

Given:

Growth in velocity = 0 (stable at 4% hence 0 growth) Inflation = 4% Real economic growth = 4%

Using formula

Growth in money supply + Growth in velocity = Inflation + Real economic growth

Growth in money supply + 0 = 4% + 4% Growth in money supply = 8%

Suppose that the velocity of money is stable, 4% real economic growth is occurring, the rate of inflation is 4%, unemployment is 5.3%, and the marginal propensity to save is 3%.By how much is the money supply growing? Enter your answer as a percentage.

Suppose that the velocity of money is stable, 4% real economic growth is occurring, the rate of inflation is 4%, unemployment is 5.3%, and the marginal propensity to save is 3%.

By how much is the money supply growing? Enter your answer as a percentage.