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Suppose the demand for money is d (g) = 475 481 + 0. 38Y The price level P = 2. 85 and income Y1 =

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Suppose the demand for money is d (g) = 475 481\" + 0. 38Y The price level P = 2. 85 and income Y1 = 1125. a. What is the nominal money supply, M1, for equilibrium in the market for money whens" = r' = 0.04? b. ' In the Mundell- Fleming model, LM\" is vertical at Y1. Plot the LM* curve together with the 18* curve from the previous problem Mark the exchange rate 61 where they intersect c. ' Compute the equilibrium exchange rate .91

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