Problem
1. Suppose that the velocity of circulation of money is V = 5 and the nominal GDP of the nation is $200 billion.
(a) What is the quantity of money demanded by the nation?
(b) By how much will the quantity of money demanded rise if the nation's nominal GDP rises to $220 billion?
(c) What happens to the nation's demand for money if its nominal GDP increases by 10 percent each year?
2. Suppose that the domestic credit created by the nation's monetary authorities is $8 billion and the nation's international reserves are $2 billion, and that the legal reserve requirement for the nation's commercial banking system is 25 percent.
(a) How much is the monetary base of the nation?
(b) What is the value of the money multiplier?
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.