Question

Complets the first row of the table with the quantity of burgers that can be bought with $700. Hint: In this problem, your calculations result in 1.5 burgers, the answer should be 1 burger. assume it is not possible to buy a fraction of a burger, and always round down to the nearest whole burger. For example, if Year 2016 2017 Price of a Burger (Dollars) 4.00 Burgers Bought with $700 (Quantity) Suppose the government of Tralfamadore cannot raise sufficient tax revenue to pay its debts. In order to meet its debt obligations, the government prints money. As a result, the money supply rises by 20% by 2017. Assuming monetary neutrality holds, complete the second row of the table with the new price of a burger and the new quantity of burgers that can be bought with $700 in 2017. The impact of the government's decision to raise revenue by printing money on the value of money is known as the

Answer 1

Answer:

Year 2016            700/4 = 175 Burgers

Year 2017            700/4.8 = 145  Burgers

Explanation:

Year Price of a burger                       Burgers bought with $700

2016 4                                                          700/4 = 175

2017 4 + (20%*4) = 4 + 0.8 = 4.8                    700/4.8 = 145

(Price of burger rise by 20% in 2017 due to increase in the money supply.)

inflation tax.

(The impact is inflation tax as it reduced the value of money due to inflation.)