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20 January, 22:11

Complets the first row of the table with the quantity of burgers that can be bought with $700. Hint: In this problem, your calculations result in 1.5 burgers, the answer should be 1 burger. assume it is not possible to buy a fraction of a burger, and always round down to the nearest whole burger. For example, if Year 2016 2017 Price of a Burger (Dollars) 4.00 Burgers Bought with $700 (Quantity) Suppose the government of Tralfamadore cannot raise sufficient tax revenue to pay its debts. In order to meet its debt obligations, the government prints money. As a result, the money supply rises by 20% by 2017. Assuming monetary neutrality holds, complete the second row of the table with the new price of a burger and the new quantity of burgers that can be bought with $700 in 2017. The impact of the government's decision to raise revenue by printing money on the value of money is known as the

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  1. 20 January, 22:28
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    Year 2016 700/4 = 175 Burgers

    Year 2017 700/4.8 = 145 Burgers

    Explanation:

    Year Price of a burger Burgers bought with $700

    2016 4 700/4 = 175

    2017 4 + (20%*4) = 4 + 0.8 = 4.8 700/4.8 = 145

    (Price of burger rise by 20% in 2017 due to increase in the money supply.)

    inflation tax.

    (The impact is inflation tax as it reduced the value of money due to inflation.)
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