# Macro Economic Breakdown Of Monetary Systems Case Study

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In order to explain the link between inflation and the money supply, economists use what's called the quantity theory of money. It centers on the Quantity Equation. This basically says that economic output (gross domestic product) is equal to how big the money supply is, this is multiplied by the velocity of money, which is how many times the same dollar gets spend throughout the year. Real GDP is equal to how big the money supply is I multiplied by the velocity of money. In macroeconomics it boils down to that the money supply times the velocity of money is equal to the price level times the nominal GDP. For example: suppose your price level is 1, while nominal output is \$200. The money supply is \$100. When using the above formula basically it means that the average dollar bill in circulation is getting spent two times during the year because if you work out the velocity it comes to 2. Another way of looking at this is that money is turning over at a rate of two times per year. If the central bank decides to doubles the money supply from 100 to 200 dollars while the nominal GDP and the velocity of money stay the same it would mean that the price level will now double. When the central bank increased the money supply by 100

• ## Perfect Competitive Market Case Study

How would the \$100 per unit tax affect the firms profit per day? Answer a) How much will the firm produce? i) Profit maximizing firm will always produce where marginal cost = marginal revenue (MC=MR) ii) A monopoly will face a MR curve with twice the slope of the demand curve. Therefore MR = 500+ 2x…

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• ## The Three Major Stages Of Auditing For The Uden Supply Company

To calculate advertising expense as a percent of sales, 20x3 advertising expense of \$202 divided by sales of 10100 equals .02. 20x4 sales are expected to be \$10,800 multiplied by .02 to realize expected expense of \$216. To calculate payroll taxes a sa percentage of salaries, 20x3 payroll taxes of \$199 divided by salaries of \$1103 results in .1804. For 20x4 expected salaries are at \$1124, multiply that by .1804 resulting in payroll taxes of…

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• ## Differences Between Stock And Bond Valuation

A stock which pays a 20 \$ dividend when the required rate of return is 10% and is expected to grow at a constant rate of 5% would be valued at 420\$. This figure was obtained by taking 20\$ multiplied by 1.05 to find the expected dividend at the end of the year which equals 21\$ per share. 21\$ per share was divided by 0.05 which is the required rate of return of 10% minus the growth rate of 5% to obtain a value of 420\$ per share. In the first example with a 20\$ dividend and 10% required rate of return the stock was valued at 200\$ per share. If dividends are expected to grow at a steady rate of 5% the value of the stock increase to 440\$.…

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• ## Effect Of Interest Rates On Exchange Rates

Introduction Foreign currencies are traded with one another in a foreign exchange market. The price of one country’s currency depends on the exchange rate. Some currencies have higher exchange rates depending on the supply and demand. “For example, it may take \$1.35 to buy 1 British Pound”; this means that it takes less British pound to buy a dollar. But, if the US increases the value of its dollar, the exchange rate would increase and it would cost more Pounds to buy a dollar.…

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• ## Analysis Of Chaikin Money Flow

Famous Stock Analyst Marc Chaikin created Chaikin Money Flow which measures the amount of Money Flow Volume over a specific period. The Chaikin Money Flow oscillator is calculated from the daily readings of the Accumulation/Distribution Line. Chaikin believed that buying and selling pressures could be determined by where a period closes in relation to its high/low range. If the period closes in the upper half of the range, then buying pressure is higher and if the period closes in the lower half of the range, then selling pressure is higher. The formula for Chaikin Money Flow is the cumulative total of the Accumulation/Distribution Values for 21 periods divided by the cumulative total of volume for 21 periods.…

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• ## Chixchops Case Study

5 times a year that ChixChops is projected to sell and replenish its inventory. MEASURING INSOLVENCY EQUITY RATIO Formula: Partners Equity / Total Assets Computation: Average Equity Ratio This ratio refers to the relative proportion of equity applied to finance the assets of the company. A 100% of its total assets is provided by the partners of ChixChops. MEASURES OF PROFITABILITY RETURN ON ASSETS Formula: Return on Assets= Net Profit After Tax / Total Assets Computation: 0.32 Average Return on Assets This ratio indicates how profitable a company is relative to its total assets. This ratio illustrates how well management is employing a company’s total assets to make a profit.…

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• ## Simple Interest Formulas Assignment: Interest And Loan Concepts

By paying the \$10000 45 days in advance I was able to save \$49.25. If I did not pay any in advance I would of paid \$30,300 total. Question 4: (10 Points) Find the bank discount and proceeds using ordinary interest on an unsecured promissory note made to Leslie Smith for \$12,000 at 7% annual simple interest from June 15 to September 15 for this year. Use the steps below to find your…

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• ## Chapter Notes: The Bc's Bonds

The bond has a face value of \$1,000 and a YTM of 10.5883%. The bonds pay coupons semiannually. What is the bond's current yield? Exercise: 10 A 10 year, 12% semiannually coupon bond with a par value of \$1,000 may be called in 4 years at a call price of \$1,060. The bond sells for \$ 1,100.…

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• ## Comparison Between Fiscal Policy And Keynesianism

Monetary policy is very similar to fiscal policy. Like fiscal policy, monetary policy is used to speed up or slow down the economy. Unlike the national fiscal policy which is determined by the Executive and Legislative Branches, monetary policy is controlled by central banks such as the Federal Reserve. It is presumed that monetary policy causes the economy to grow at unusually high speeds by encouraging businesses and consumers to borrow and spend (Investopedia 1). If spending is restricted and savings are incentivized, the economy will have slower growth than usual.…

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• ## Economics: Multiple Choice Questions

The tax is increased to 20 cents per gallon. The excess burden of the tax will: a. remain the same. b. double. c. increase four times. d. decline.…

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