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22 October, 12:48

In drewland, the money supply equals $1,000 and velocity of money is 3. the government budget is $300, consumers spend $1500, and investors spend $500. when national output is 30, then price equals

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  1. 22 October, 15:30
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    We are given:

    Money supply = $1,000

    Velocity of money = 3, this is the amount per unit time

    Government Budget = $300

    Consumers = $1500

    Investors = $500

    National Output = 30

    First, let us group the terms:

    Input = Money Supply + Investors

    Output = Government Budget + Consumers

    Input = $1000 + $500 = $1500

    Output = $1500 + $300 = $1800

    The price should be the difference of Output - Input:

    $1800 - $1500 = $300.

    This should be the least price value for Drewland to break even on their budget and expenses.
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