Question 11: A

Consider the closed economy Quantity Theory. You are given the following information:

Output grows at the rate of 4%

Velocity grows at the rate of 2%

If the central bank wants to keep the inflation rate at its $1 \%$ level, the rate of growth of money must be ___

A) 3%

B) 5%

C) -1%

D) -6

QUESTION 13

Label the next column (D) "6-month change." Here we will calculate how much prices have changed since the price six months ago. For example, if the price on January 1 were 224.1 and the price on July 1 is 324.1, the price change is 100. We can't calculate how much prices have changed over the past six months for the first half of 2008 because we don't know the price six months before. So, in column D, put an x in each cell for which we can't calculate the 6-month change. Starting in July, we can calculate the 6-month change. Using cell references, enter here the formula you should enter into cell D30 to calculate the 6-month change.

2 points

QUESTION 14

Copy and paste the formula from cell D30 (from the last question) into cells D31 to D55. What formula is now in cell D48?

2 points

QUESTION 15

What value is now in cell D50?

1 point

QUESTION 16

Label the next column (E) "% of Jan." In this column, we will divide every week's price by the price from January 7th. This will tell us as a percent how prices compare to their level at the start of the year. This time, we want an "absolute" reference so that it doesn't consider the position (i.e. "8 to the left and 2 down") but just locks in on B4 every time. To set up an absolute reference in a formula, we put the $ character into the reference, so instead of B4, we use $B$4. With the dollar signs in place, you can copy the formula and paste it, and in each case, it will go back to B4 regardless of where you are when you paste it. What formula should you type into cell E5 to get the "% of Jan" for January 14, 2008? Remember to use the absolute reference so it will be easy to copy later!

2 points

QUESTION 17

Copy and paste the formula from cell E5 into the rest of column E. (Well, at least from E6 down to E55.) What formula is now in cell E17?

When should one use the midpoint formula in economics?