Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

hi , i need someone to answer this question Suppose the money demand function is Md//P = 2500 + 0.2 Y - 10,000 (r +

hi , i need someone to answer this question

image text in transcribed
Suppose the money demand function is Md//P = 2500 + 0.2 Y - 10,000 (r + me). (a) Calculate velocity if Y = 10,000, r= .18, and me = .02. [6 Marks] (b) If the money supply (MS) is 5000, calculate the price level? [6 Marks] (c) Now suppose the real interest rate rises to 0.20, but Y and MS are unchanged. What happens to velocity and the price level? If the nominal interest rate were to rise from 0.20 to 0.25 over the course of a year, with Y remaining at 10,000, calculate the inflation rate be? [8 Marks]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Accounting Chapters 1-12

Authors: David D Busch, Tracie Nobles

11th Edition

1133710190, 978-1133710196

More Books

Students also viewed these Economics questions

Question

a. What is the name of the university?

Answered: 1 week ago

Question

1. What does this mean for me?

Answered: 1 week ago