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Assume that V is constant, M grows at an annual rate of 5%, Y at a rate of 2% and r = 4%. a) What
Assume that V is constant, M grows at an annual rate of 5%, Y at a rate of 2% and r = 4%. a) What will be the nominal interest rate? b) How will the nominal interest rate change when the CB increases the growth rate of money supply by 2 percentage points? c) Assume that the growth rate of Y drops to 1%. . How will the inflation rate change? . What must the CB do to ensure that the inflation rate does not change
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