Fisheria Is a Country in Which the Quantity Theory of Money

question 487

Essay

Fisheria is a country in which the quantity theory of money operates. The country has a constant population, capital stock, and technology. In 2010, real GDP was $300 million, the quantity of money was $60, and the velocity of circulation of money was 10. In 2015, the price level rose by 20 percent.
a) What was the price level in 2014? (The price level is measured by the GDP deflator, which is 100 in the base year. So the price level from the equation of exchange needs to be multiplied by 100 to convert it to the GDP deflator.)
b) What was real GDP in 2015?
c) What was the velocity of circulation in 2015?
d) What was the quantity of money in 2015?

---

Definitions:

Developmental Tasks

Skills and behaviour patterns learned during stages of development.

Terminal Illness

A disease or condition that is considered incurable and is expected to lead to the death of the patient within a relatively short time frame.

Developmental Task

Specific accomplishments that are achieved at certain periods in life, contributing to successful progression through stages of development.

Superego

The conscience of personality; the source of feelings of guilt, shame, and inhibition.