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Destinyyyy
 one year ago
Need help with three questions.
Destinyyyy
 one year ago
Need help with three questions.

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Destinyyyy
 one year ago
Best ResponseYou've already chosen the best response.0Suppose that the nominal money supply equals $2 billion and nominal GDP is $16 billion. Then, according to the equation of exchange, what is the velocity of money? If the Fed wants to close a recessionary (deflationary) gap (real GDP is less than potential GDP), should it buy or sell government securities? Why?

Destinyyyy
 one year ago
Best ResponseYou've already chosen the best response.0Second one answer When the economy is in recessionary gap, the Fed will adopt expansionary monetary policy to increase money supply in the market by buying securities, lowering the reserve rate, and/or decreasing the discount rate.

anonymous
 one year ago
Best ResponseYou've already chosen the best response.0oh!! srry...and yeah exactly that's the answer.. for first one here is the link.. http://www.investopedia.com/terms/e/equation_of_exchange.asp

anonymous
 one year ago
Best ResponseYou've already chosen the best response.0and here the video.. it will help u understand better http://study.com/academy/lesson/thevelocityofmoneydefinitionandcirculationspeed.html

Destinyyyy
 one year ago
Best ResponseYou've already chosen the best response.0It wont let me watch the whole thing :( And I was on that website invetopedia and I didnt see how to solve it

anonymous
 one year ago
Best ResponseYou've already chosen the best response.0oh!! k :O anyways so every transaction involves 2 way swap: the buyer exchange money for goods and seller exchanges goods fro money.. so basic equation is: M*V=P*Y M=quantity of money, v=velocity ofmoney ,P=avg price level and Y=real GDP

Destinyyyy
 one year ago
Best ResponseYou've already chosen the best response.0Yes I know that.. But where is nominal money and GDP in the equation? O.o

anonymous
 one year ago
Best ResponseYou've already chosen the best response.0see money supply is given= 2 billion, real gdp=16 billion, the matter is where is the price level.....! everything else is given

Destinyyyy
 one year ago
Best ResponseYou've already chosen the best response.0Ohh.. So I can ignore the word nominal.. Okay thank you!
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