Question: Suppose the money demand function is M d / P = 2 0 0 0 + 0 . 2 Y - 1 0 0 0
Suppose the money demand function is M d P Y r e a Calculate velocity if Y r and e b If the money supply M s is what is the price level? c Now suppose the real interest rate rises to but Y and M s are unchanged. What happens to velocity and the price level? So if the nominal interest rate were to rise from to over the course of a year, with Y remaining at what would the inflation rate be
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