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Assume that real income is expected to grow by 8% over the next year, the interest rate remains constant, and the income elasticity of real
Assume that real income is expected to grow by 8% over the next year, the interest rate remains constant, and the income elasticity of real money demand equals the value found in part b. Find out how much the central bank should increase the money supply if it pursues an inflation target of zero inflation for the next year. Also, find the new level of money supply in this economy
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