Question
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.
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. The real interest rate r is fixed at 3 percent by the investment and saving functions. Assume that the inflation rate equals the rate of nominal money growth. If Y is 1,000, M is 100, and the growth rate of nominal money is2percent, what must i and P be
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Microeconomics A Contemporary Introduction
Authors: William A. McEachern
9th edition
978-0538453714, 538453710, 978-1111415921
