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FrozenT [24]
3 years ago
9

Suppose that the money supply and the nominal GDP for a hypothetical economy are $96 bilion and $336 bilion, respectively. (In p

art a round your answer to 1 decimal place. In part c enter your answer as a whole number.)a. What is the velocity of money?b. How will households and businesses react if the central bank reduces the money supply by $20 billion?
i. Households and businesses will increase spendingii. Households and businesses will not react.iii. Households and businesses will reduce spending.c. By how much will nominal GDP have to fall to restore equilibrium, according to the monetarist perspective?
Business
1 answer:
Alina [70]3 years ago
7 0

Answer:

V = 3.5  (1 dollar circulates 3.5 times in a year)

In short term – Reduction of aggregate demand and real output

In long term – reduction of wages and increase of real output of firms

Nominal GDP will fall by $20 bilion

Explanation:

Equation of monetisation =  

Total money in circulation = Total money demanded/total output

Money Supply * Money Velocity = Price Level * GDP

V = PY/M  

Substituting the given values, we get –  

V = 336/96  

V = 3.5  

This indicates 1 dollar circulates 3.5 times in a year

In short term – Reduction of aggregate demand and real output

In long term – reduction of wages and increase of real output of firms

Nominal GDP will fall by $20 bilion

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Answer:

Instructions are listed below

Explanation:

Giving the following information:

She has a choice of receiving a payment of $160,000 immediately or of receiving deferred perpetuity with $10,000 annual payments, the first payment occurring in exactly four years.

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B) i= 6%

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C) She should consider her necessities of cash and the value of the products she can purchase now.

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3 years ago
Joe quits his computer programming​ job, where he was earning a salary of ​$65,000 per​ year, to start his own computer software
Verizon [17]

Answer:

The accounting cost and the economic cost associated with​ Joe's computer software business is $75,00 and the $165,000 respectively.

Explanation:

The computation of the accounting cost and the economic cost is shown below:

Accounting cost =  Other Expenses + Salary paid to himself

                           = $35000 + $40,000

                           = $75,000

Economic cost = Accounting cost + Salary expense + Rent expenses

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                        = $165,000

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3 years ago
It’s the year 2150, and the human race has established a new country on Mars. After a dispute about water rationing, a war begin
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Answer:

Executive order

Explanation:

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it is Refer to official order directly issued by the president to prevent or allow doing something.  

As it is mentioned in the information in the given question, in 2150, when people are having a war for water on the new country of Mars, then president of America issued an executive order to notify every executive body not to sell any good and service to a new country of mars

8 0
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On January 1, 2018, Surreal Manufacturing issued 600 bonds, each with a face value of $1,000, a stated interest rate of 3 percen
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Answer:

Period    Bonds        Interest    Cash        Increase in        Bonds payable

             Payable     Expenses   Paid       Bonds payable     at the end

2018     583352      23334.08   18000         5334.08          588686.1

2019     588686.1    23547.44   18000         5547.44          594233.5    

2020    594233.5   23766.48   18000         5766.48          600000

Journal entries

<u>Jan 01 2018</u>

Cash account Dr $583352

Discount on Bonds Payable Dr $16648

Bonds payable Cr $600000

<u>Dec 31 2018</u>

Interest expense Dr $23334.08

Cash account Cr $18000

Discount on bonds Payable Cr $5334.08

<u>Dec 31 2019</u>

Interest expense Dr $23547.44

Cash account Cr $18000

Discount on bonds Payable Cr $5547.44

<u>Dec 31 2020</u>

Interest expense Dr 23766.48

Cash account Cr $18000

Discount on bonds Payable Cr $5766.48

<u>Dec 31 2020</u>

Bonds Payable Dr $600000

Cash account Cr $600000

<u>01.01.2020</u> (Redemption at 101)

Bonds Payable Dr $600000

Loss on redemption of bonds Dr $11766.48

Cash account (600000*101%) Cr $606000

Discount on bonds payable Cr $5766.48

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