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C: Money demand and interest rates For questions 13-17, assume that the real money demand function is L (Y, 2), where Y is real output,'i
C: Money demand and interest rates For questions 13-17, assume that the real money demand function is L (Y, 2), where Y is real output,'i is the real interest rate. C1: Money demand elasticities Questions 13 and 14 use the following information: during one year income rises by 3% and the nominal interest rate rises from 5% to 6%, while real money demand rises by 1%; and in another year, income falls by 3.5%, the nominal interest rate falls from 4% to 3%, while real money demand falls by 1%. Question 13 What is the income elasticity of money demand? 0.1
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