Question
Suppose is constant, M is growing 5% per year, Y is growing 2% per year, and r = 4. a. Solve for i (the
Suppose is constant, M is growing 5% per year, Y is growing 2% per year, and r = 4. a. Solve for i (the nominal interest rate). b. If the Fed increases the money growth rate by 2 percentage points per year, find Ai. c. Suppose the growth rate of Y falls to 1% per year. What will happen to inflation (7)? What must the Fed do if it wishes to keep a constant?
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Macroeconomics Principles And Policy
Authors: William J. Baumol, Alan S. Blinder
11th Edition
0324586213, 978-0324586213
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