Assume that the demand for real money balance (M / P) is M / P = 0.6Y - 100i, where Y

is national income, and i is the nominal interest rate (in percent). The real interest rate r is fixed

at 3 percent by the investment and saving functions. The expected inflation rate equals the rate of nominal money growth.

8. If Y is 1,000, M is 100, and the growth rate of nominal money is 1 percent, what must i

and P be?

9. If Y is 1,000, M is 100, and the growth rate of nominal money is 2 percent, what must i

and P be?