1. Calculate the real interest rate. If the real interest rate remains unchanged and the inflation rate increases to 2 percent a year and then remains constant, explain how the nominal interest rate will change in the long run. 

In 2016, the economy of Singapore was at full employment. In Singapore dollars, S$, real GDP was 400 billion. The nominal interest rate was 1.8 percent a year, the inflation rate was -1.6 percent a year (deflation), the price level was 1.02, and the velocity of circulation was 0.76.

2. What was the quantity of money in Singapore?

In 2016, the economy of Singapore was at full employment. In Singapore dollars, S$, real GDP was 400 billion. The nominal interest rate was 1.8 percent a year, the inflation rate was -1.6 percent a year (deflation), the price level was 1.02, and the velocity of circulation was 0.76.

3. If the quantity of money grows at 8 percent a year, velocity of circulation is constant, and potential GDP grows at 6 percent a year, what is the inflation rate in the long run?