Question: Question 8 . Suppose the money demand function is M ^ d / p = kY where k is a parameter. The money supply growths

Question 8. Suppose the money demand function is M^d/
p = kY where k is a parameter. The money supply growths by 12% per year and real income grows by 4%. a. What is the average ination rate? b. How is k related to the velocity of money?

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