Respuesta :
Given: The money demand is:p = 500 + 0.2Y − 1,000ip=500+0.2Y−1,000i
Now, the P is = 100
Y = 1,000
I = 0.10
Part-A)
The real money demand, nominal money demand, and velocity:
Real Money Demand = \frac{MD}{P}\\ = 500 + 0.2Y − 1,000i\\ = 500 + 0.2 (1,000) − 1,000 (0.10)\\ = 500 + 200 − 100\\ = 700 − 100\\ = 600RealMoneyDemand=
P
MD
=500+0.2Y−1,000i
=500+0.2(1,000)−1,000(0.10)
=500+200−100
=700−100
=600
Nominal\space Money\space Demand = Real\space money \space demand × Price\\ = 600 × 100\\= 60,000Nominal Money Demand=Real money demand×Price
=600×100
=60,000
Velocity:
MV=PY
60,000×V=100×1,000
60,000×V=100,000
V=
60,000
100,000
V=1.66
Part-B)
The price level doubles from P = 100 to P = 200, then the real money demand, nominal money demand, and velocity:
Real Money Demand = \frac{MD}{P}\\ = 500 + 0.2Y − 1,000i\\ = 500 + 0.2 (1,000) − 1,000 (0.10)\\ = 500 + 200 − 100\\ = 700 − 100\\ = 600RealMoneyDemand=
P
MD
=500+0.2Y−1,000i
=500+0.2(1,000)−1,000(0.10)
=500+200−100
=700−100
=600
Nominal\space Money\space Demand = Real\space money \space demand × Price\\ = 600 × 200\\= 120,000Nominal Money Demand=Real money demand×Price
=600×200
=120,000
Velocity:\\ MV = PY\\120,000 × V = 200 × 1,000\\120,000 × V = 200,000\\V = \frac{200,000}{120,000}\\V = 1.66Velocity:
MV=PY
120,000×V=200×1,000
120,000×V=200,000
V=
120,000
200,000
V=1.66
How do you find nominal velocity?
It is calculated by dividing nominal spending by the money supply, which is the total stock of money in the economy: velocity of money = nominal spending money supply = nominal GDP money supply.
What is the nominal velocity of propagation?
NVP Nominal velocity of propagation. The speed that which a signal propagates through a cable is expressed as a decimal fraction of the speed of light in a vacuum. Typical copper cables have an NVP value of between 0.6c and 0.9c.
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