xp, where we have the following. A demand function for money is given by M =...

 

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xp, where we have the following. A demand function for money is given by M = 2 y.6 -0.3 = demand for nominal money balances (money stock) y = Md real income r = an index of interest rates = an index of prices We also have the following equation for percentage rate of growth. Rate of growth of M Percentage rate of growth of M = M = dM/dt M Use the information above (taken from a question on the GRE Economics Test) to answer the following question. If real income grows by 4% per year, the interest rate grows by 2% per year, and the price level drops by 4% per year, the money stock must change by what percent per year? -14.93 % xp, where we have the following. A demand function for money is given by M = 2 y.6 -0.3 = demand for nominal money balances (money stock) y = Md real income r = an index of interest rates = an index of prices We also have the following equation for percentage rate of growth. Rate of growth of M Percentage rate of growth of M = M = dM/dt M Use the information above (taken from a question on the GRE Economics Test) to answer the following question. If real income grows by 4% per year, the interest rate grows by 2% per year, and the price level drops by 4% per year, the money stock must change by what percent per year? -14.93 %