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41) Continue the previous question. The nominal money supply in Delta is M = 265. Households' real money demand is given by the function L(Y,i)
41) Continue the previous question. The nominal money supply in Delta is M = 265. Households' real money demand is given by the function L(Y,i) = 200 + 0.5V - 250i. The current price level is P = 1 and people in Delta have inflation expectations of n3 = 0.01. Is the economy in general equilibrium? What is the short-run real interest rate? A) No, the real interest rate is r: 2%. B) Yes, the real interest rate is r: 1%. C) No, the real interest rate is r: 1%. D) Yes, the real interest rate is r: 2%
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