 | Economics 14/e McConnell | |||||
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| Economics 14/e McConnell | |||||
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Chapter 17 Web-Based Questions
17-16 Web Based QuestionThe Equation of Exchange – What Is the Current Velocity of Money? The fundamental equation of monetarism is the equation of exchange: MV=PQ=GDP. The velocity of money V can be found by dividing GDP by M the money supply. Calculate the velocity of money for the past few years. Which GDP data should be used: real or nominal GDP? Why? How stable is V during this time? Is V increasing or decreasing? Get GDP data from the NIPA Data section at the Bureau of Economic Analysis http://www.bea.doc.gov/bea/glance.htm. Money supply data can be found at the Federal Reserve http://www.bog.frb.fed.us/releases/h6/about.htm under Money Stock Liquid Assets and Dept Measures – Historical Data.
17-17 Web Based Question
American Real GDP – Is It Really More Stable Than Other Countries’? Since 1946 quarterly changes in American real GDP have been less volatile than in earlier decades. How does recetn U.S. GDP volatility compare to other countries? Would you expect it to be more or less stable? Why or why not? Is there a pattern (e.g. is lower volatility associated with higher GDP countries)? Would the comparison be balid if nominal GDP data was used rather than real GDP data? Visit the Quarterly Growth Rates in GDP at Constant Prices section at the OECD http://www.oecd.org/std/nahome.htm.
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