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Consider an economy where demand for real money balances is (M / P) =eY - fite . The variable e represents the effect of any

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Consider an economy where demand for real money balances is (M / P)" =eY - fite . The variable e represents the effect of any special factors, other than real income or the nominal interest rate, that might affect money demand. The real interest rate is r=i-Ex. The money supply M" is determined by the central bank. 1) Derive an equation that gives (M / P)" as a function of Y, Ex , r and e . In this equation, (M / P)" should be alone on the left-hand side

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