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Use this environment for the next three questions. The elasticity of real money demand with respect to real income is 0.5 and the elasticity of
Use this environment for the next three questions. The elasticity of real money demand with respect to real income is 0.5 and the elasticity of real money demand with respect to the nominal return on non-monetary assets is 0.1. The central bank increases nominal money supply by 5%. Real GDP (and real income) goes up by 2.5%. Nominal return on non-monetary assets increases by 1%. Calculate inflation. (Approximate your answer to 3 decimal points. The answer is a percentage; if your answer is 8.231%, you should type "8.231") Use this environment for the next three questions. The elasticity of real money demand with respect to real income is 0.5 and the elasticity of real money demand with respect to the nominal return on non-monetary assets is 0.1. The central bank increases nominal money supply by 5%. Real GDP (and real income) goes up by 2.5%. Nominal return on non-monetary assets increases by 1%. Calculate inflation. (Approximate your answer to 3 decimal points. The answer is a percentage; if your answer is 8.231%, you should type "8.231")
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