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The data below are from the economies of Bonvampton and Karbandia.
(a) Calculate each of the following for Year 2. Show your work.) Real GDP per capita for
Bonvampton(1) Real GDP per capita for Karbandia
(b) of Bonvampton and Karbandia have the same velocity of money in Year 2, which economy
must have the higher money supply in Year 2? Explain.
(c) Calculate each of the following in Yoar 2. Show your work. (0) The inflation rate in
Bonvampton(i) The inflation rate in Karbandia
(d) Based on your answer to part (c), if the nominal interest rate is the same for both economies
in Year 2, which economy experiences the higher real interest rate in Year 2? Explain.
(e) Assume that in Year 11 Karbandia is operating inside its production possibilities curve and that
Karbandia's production possibilities curve remains unchanged from Year 1 to Year 2. As a result of
the change in real GDP from Yoar 1 to Yoar 2, doos Karbandia's economy move closer to or
farther away from its production possibilities curve? Explain using numbers for real GDP and state
what will happen to cyclical unemployment in the short run.
