During the Civil War, both the Union and the Confederacy were forced to run large budget deficits that were financed by issuing debt. Why was this form of war finance necessary? b. In both the Union and the Confederacy much of this debt issue took the form of note issue. What was the effect of such note issue on prices in both nations? Why did note issue affect prices? c. The following table provides data on the stock of money and the price level in the Union during the years of the Civil War. Both variables are measured as an index with 1860 set equal to 100. Money Stock Price Level 1860 100 100 1861 101 110 1862 113 142 1863 139 229 1864 176 240 1865 175 267 How does the experience of the Union with regard to the growth in its money stock and price level compare with that of the Confederacy as illustrated in Figure 14.2? d. Recall that the Equation of Exchange, MV = PY, implies that % % %% + = + M V PY where % stands for percentage change (i.e., the rate of growth). As we have seen, during the