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The One Product economy which produces and sells only personal computers PCs expects that it can sell 500 more or 12500 PCs next year Nominal GDP was $20 million this year and the money

The One Product economy, which produces and sells only

personal computers (PCs), expects that it can sell 500 more, or 12,500

PCs, next year. Nominal GDP was $20 million this year, and the

money supply was $7 million. The central bank for the One Product

economy plans to increase the money supply by 10 percent next year.

a. What was the average selling price for the personal computers

this year?

b. What is the expected average selling price next year for

personal computers if the velocity of money remains at this

year%u2019s turnover rate? What percentage change in price level is

expected to occur?

c. If the objective is to keep the price level the same next year

(i.e., no inflation), what percentage increase in the money

supply should the central bank plan for?

d. How would your answer in (c) change if the velocity of money

is expected to be three times next year? What is it now?

 

One Product Economy - PC's
  This Year Next Year
Real Output $12,000 $12,500
Nominal GDP $20,000,000 $22,000,000
Money Supply $7,000,000 $7,700,000
Velocity 2.86 2.86
     
Average Selling Price This Year $1,667  
Average selling Price Next Year $1,760  
% Change in Price level    
GDP with No Inflation    
Money Supply with no Inflation    
% Increase in Money Supply    
Money Supply with no Inflation    
% Increase in Money Supply    

 

 

I have to put the equation in each area I got this far and need help

 

May 14 2020 View more View Less

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