Consider a simple economy that produces only latkes. The following table contain
ID: 1184253 • Letter: C
Question
Consider a simple economy that produces only latkes. The following table contains information on the economy's output, money supply, velocity of money, and price level. For example, in 2011, the money supply was $400, the price of a latke was $10.00, and the economy produced 800 latkes. Fill in the table, and use it to answer the following questions. In 2011, nominal GDP was $8,000, whereas in 2012, nominal GDP was $8,160. The money supply grew at a rate of from 2011 to 2012. Since latke output did not change from 2011 to 2012 and the velocity of money remained the same, the change in the money supply was reflected entirely in changes in the price level. The inflation rate from 2011 to 2012 was .Explanation / Answer
all of the blanks filled by you are correct. Money supply grew at the rate of 8$/annum.( change in money supply/time) The inflation rate from 2011 to 2012 was 2.(change in money supply*100/money supply in 2011)