2. Suppose that the demand for real money balances takes the form (M/P)d = L(i, Y) = Y/(51). (a) If output grows at the rate g, at what rate will the demand for real money balances grow (assuming constant nominal interest rates)? (b) What is the velocity of money in this economy? (c) If inflation and nominal interest rates are constant, at what rate will velocity grow? (d) Consider now the more sophisticated theory of money so assume that i = r + En, where En is expected inflation. How will an increase in expected inflation affect money demand, velocity, and the price level today? Does the increase in expected inflation make one dollar today more or less valuable in real terms? Provide intuition for your answers