Suppose that the demand for money is given by where M is nominal balances, P the price
Question:
Suppose that the demand for money is given by
where M is nominal balances, P the price level, i the nominal interest rate, and Y is real income. a and b are parameters. For given values of i and Y, state whether the following statements are true, false, or uncertain.
a. An agricultural society has lower real money demand than an industrial society.
b. Real money demand is higher in dictatorships than in democracies.
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Related Book For
The Economics Of Money Banking And Financial Markets
ISBN: 9780321584717
4th Canadian Edition
Authors: Frederic S. Mishkin, Apostolos Serletis
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