Problem
Inhabitants of Pandora use stone beads as money. On average, every stone bead is used five times per year to carry out transactions. The total supply of beads is forty million.
a) What is the level of aggregate spending in Pandora according to the quantity theory of money?
b) Suppose now that the inhabitants of Pandora use less money to conduct the same number of transactions (i.e., each individual carries fewer beads). What is the effect on the velocity of money?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.