Friedmania Is a Country in Which the Quantity Theory of Money

question 110

Essay

Friedmania is a country in which the quantity theory of money operates. The country has a constant population, capital stock, and technology so real GDP does not change. In 2008, real GDP was $500 million, the price level, measured by the GDP deflator, was 150 and the velocity of circulation of money was 10. (Because the price level is measured by the GDP deflator, it must be divided by 100 before it is used in the equation of exchange.) In 2009 the quantity of money increased by 20 percent.
a) What was the quantity of money in 2008?
b) What was the velocity of circulation in 2009?
c) What was the price level in 2009?

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Definitions:

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The objective analysis and evaluation of an issue in order to form a judgment, crucial in problem-solving and decision-making processes.

Obtain An Interpreter

The process of hiring a person fluent in multiple languages to translate spoken or written communication between parties.

Medical Jargon

Specialized language used by healthcare professionals that can be confusing or incomprehensible to those outside the medical community.

Critical Thinking Skill

The ability to analyze information objectively and make a reasoned judgment.