If the velocity of circulation is constant, real GDP is growing at 3 percent a year, the

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If the velocity of circulation is constant, real GDP is growing at 3 percent a year, the real interest rate is 2 percent a year, and the nominal interest rate is 7 percent a year, calculate the inflation rate, the growth rate of money, and the growth rate of nominal GDP.

Use Table 1, which shows a bank’s balance sheet, to work Problems 7 and 8.

The desired reserve ratio on all deposits is 5 percent and there is no currency drain.

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Essential Foundations Of Economics

ISBN: 9781786633255

8th Edition

Authors: Robin Bade, Michael Parkin

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