Question: 1. An eoonomy has the following money demand function: M d _ nor F _ 51:2 a. Derive the expression for the velocity of money.

1. An eoonomy has the following money demand function: M d _ nor F _ 51:2 a. Derive the expression for the velocity of money. What does velocity depend on? Explain why this dependency occur. h. Calculate the velocity if the nominal interest rate 1' is 4 percent. c. If output 1" is ly units and the money supply M is $1.2m. what is the price level P

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