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6 let real gdp growth24 per year money growth5 per...

Question: 6 let real gdp growth24 per year money growth5 per...

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6. Let real GDP growth-2.4% per year, money growth-5% per year, nominal interest rate 4.8% and velocity of money-constant. (a) Find the inflation rate, the real interest rate, and the cost of holding money. (b) What are the inflation rate, the real interest rate, and the cost of holding money if the central bank changes the money growth to 6% per year?

2. An economy produces 5 goods. The quantities produced and the prices of the 5 goods in year 1 and year 2 are shown below: Good A Good B Good C Good D Good E Year 1 Pi Q 30 100 50 200 20 300 80 100 0 100 Year 2 P2 Q2 32 100 49 210 21 295 82 110 40 95 (a) Let year 1 be the base year (i) Calculate the nominal GDP and real GDP in year 1 and year (ii) Calculate the percentage changes from year 1 to year 2 in nominal GDP and real GDP. (b) Calculate the equal-weighted diffusion index of (i real GDP in year 2 (ii) nominal GDP in year 2

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