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Assume that a country's money velocity remains constant, the inflation rate is 2%, and that the rate of money growth is 5% . AWhat is
Assume that a country's money velocity remains constant, the inflation rate is 2%, and that the rate of money growth is 5% . AWhat is the rate of spending growth for this economy? B) If money growth increases by 1.5 percentage points, what is the long-run inflation rate? C) Now using the economy in Part B, if the economy experiences a positive (long-run) productivity shock of 1%, what is the rate of monetary expansion (M ), Inflation (P), and Real GDP (Y_{R}) ?
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