16.9 Return to Problem 16.6 and now assume that Smith and Jones conduct their exchanges in paper...

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16.9 Return to Problem 16.6 and now assume that Smith and Jones conduct their exchanges in paper money. The total supply of such money is $60, and each individual wishes to hold a stock of money equal to 1

4 of the value of transactions made per period.

a. What will the money wage rate be in this model? What will the nominal prices of X and Y be?

b. Suppose the money supply increases to $90. How will your answers to part

(a) change?

Does this economy exhibit the classical dichotomy between its real and monetary sectors?

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Microeconomic Theory Basic Principles And Extensions

ISBN: 9780324270860

9th Edition

Authors: Walter Nicholson

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Question Posted: Nov 12, 2024 04:00 AM

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16.9 Return to Problem 16.6 and now assume that Smith and Jones conduct their exchanges in paper...

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Microeconomic Theory Basic Principles And Extensions

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