Use the quantity equation of money suppose the velocity of


Use the quantity equation of money. Suppose the velocity of money is constant at V=5, the price level is P=2 (i.e.. CPI = 200), and the real GDP is $2,000.

What is the quantity of money?

If the real GDP grows by 3% and the Federal Reserve want to keep the price level constant, should the Fed open market committee buy or sell bonds?

How much money should the Fed increase the quantity of money?

If the real GDP grows by 3% and the Fed increases the quantity of money by 48, how much would nominal GDP increase?

What is the approximate inflation rate?

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Business Economics: Use the quantity equation of money suppose the velocity of
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