Final answer:
The increase in expected rate of money supply growth from 0.05 to 0.06 would lead to an increase in Eₚ ₙ₁(yₚ) proportional to the change in growth rate, magnified by the velocity of money, resulting in a higher nominal GDP.
Step-by-step explanation:
To determine how much Eₚ ₙ₁(yₚ) will increase when the expected rate of money supply growth changes, we can refer to the equation of exchange which is MV=PY, where M is the money supply, V is the velocity of money, P is the price level, and Y is the real GDP. According to this equation, if all other factors remain constant and the money supply increases, nominal GDP will rise proportionally.
Given that the velocity of money is 3, as mentioned in the provided information, a $100 billion increase in money supply would result in a $300 billion increase in nominal GDP, since the total amount of expenditures (nominal GDP) would be the money supply multiplied by the velocity (M * V). Therefore, if the expected rate of money supply growth increases from 0.05 to 0.06, we expect that Eₚ ₙ₁(yₚ) will increase proportional to the change in money supply growth rate, considering the same multiplier effect.
The exact increase in Eₚ ₙ₁(yₚ) will depend on the baseline amount of money supply and the velocity of money, but the mechanism is the same - an increase in the growth rate of the money supply will be magnified by the velocity of money to result in a proportionally larger increase in nominal GDP.