suppose real GDP is growing at 4 percent, the money supply is growing at 11 percent, the velocity of money is constant and the real interest rate is 6 percent.
a. what is the current inflation rate and nominal interest rate?
b.if the money supply growth rate increases to 15 percent, how will your answers in part (a) change?
1
Expert's answer
2012-09-06T10:05:55-0400
(i) M/P=Y/V Y - growing by 3% so coeficient = 1.03 M - growing by 10% so coeficient = 1.10 V - constant =1 1.1/P=1.03/1 P=1.1/1.03≈1.068≈+6.8%
(ii) M/P=Y/V Y - growing by 3% so coeficient = 1.03 M - growing by 15% so coeficient = 1.15 V - constant =1 1.15/P=1.03/1 P=1.15/1.03≈1.1165≈+11.65%
Numbers and figures are an essential part of our world, necessary for almost everything we do every day. As important…
APPROVED BY CLIENTS
"assignmentexpert.com" is professional group of people in Math subjects! They did assignments in very high level of mathematical modelling in the best quality. Thanks a lot
Comments
Leave a comment