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Chapter 17 & 20: Case Study: Money Growth and Inflation and Aggregate Demand and Aggregate Supply: (10 Points) In the third assignment for the Macroeconomics course, the students are required to discuss how changes in the quantity of money affect the economy and the aggregate demand and the aggregate supply explains the economic fluctuations. Answer the questions given, upon successful completion of the assignment, the student should be able to achieve the following learning Outcomes: Learning Outcomes: 1. Describe how to evaluate macroeconomic conditions such as unemployment inflation, and growth. (CLO 1.2) 2. Recognize the fundamental determinant's of a nation's long-run economic growth. (CLO 1.3) Reference Source: Textbook: - "Mankiw, N. Gregory. Principles of Macroeconomics, 6th ed. Mason, OH: South-Western Cengage Learning, 2011. ISBN: 9780538453066 (hard copy): ISBN: 9781115468523 (eBook)" Case Study:1 (5 Points) Please read the case "Money and Prices during Four Hyperinflations" from Chapter 17 "Money Growth and Inflation" Page: -652 - Chapter 30 given in your textbook - "Principles of Macroeconomics". The case study presented in the chapter discussed the government can pay for some of its spending simply by printing money. When countries rely heavily on this inflation tax," the result is hyperinflation and Answer the following Questions: Questions: 1.1. Suppose a country's inflation rate increases sharply. What happens to the inflation tax on the holders of the money? Why is wealth that is held in savings accounts not subject to a change in the inflation tax? Can you think of any way holders of savings accounts are hurt by the increase in the inflation rate? (2.5 points) 1.2. It is sometimes suggested that the Federal Reserve should try to achieve zero inflation. If we assume that velocity is constant, does this zero-inflation goal require that the rate of money growth equal zero? If yes, explain why? If no, explain what the rate of money growth should equal? (2.5 points) Important Note: - Support your submission with course material concepts, principles, and theories from the textbook and at least two scholarly, peer- reviewed journal articles.
Reference Source: Textbook: - "Mankiw, N. Gregory. Principles of Macroeconomics, 6th ed. Mason, OH: South-Western Cengage Learning, 2011. ISBN: 9780538453066 (hard copy): ISBN: 9781115468523 (eBook)" Case Study:1 (5 Points) Please read the case "Money and Prices during Four Hyperinflations from Chapter 17 "Money Growth and Inflation" Page: -652 - Chapter 30 given in your textbook "Principles of Macroeconomies. The case study presented in the chapter discussed the government can pay for some of its spending simply by printing money. When countries rely heavily on this "inflation tax," the result is hyperinflation and Answer the following Questions: