Answer to Question #222183 in Macroeconomics for Roo

Question

Assume that the demand for real money balance is:

M/P-Y[0.6-(r+x)]

Income, Y= 1000. Real Interest Rate, r=0.05(5%)

Expected Inflation Rate is constant at 0.05% (5%)

calculate the seignorage if the rate of growth of nominal money rate is 7%

Answer 1

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