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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
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
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