a) If growth rate of real GDP is 8%, and velocity growth rate is 4% . If central bank targets to have 6% inflation rate ,what should be the growth rate of money supply according to equation of exchange? b) Suppose there are two villagers, Salva and Angel. Both want to borrow money from another villager named Raquel at 10% interest rate. Angel is determined to pay the loan in due time but Salva does not have that kind of intention (loan defaulter always) but does not express it to Raquel. Both of the borrowers are unknown to Raquel and she does not have much information about them. Their true intentions are totally unknown to lender Raquel.Therefore, it is quite impossible for Raquel to distinguish who might be the defaulter. Can you write down the name of this problem? Is there any possible solution to find out the right person? How?
a) If growth rate of real
b) Suppose there are two villagers, Salva and Angel. Both want to borrow money from another villager named Raquel at 10% interest rate. Angel is determined to pay the loan in due time but Salva does not have that kind of intention (loan defaulter always) but does not express it to Raquel. Both of the borrowers are unknown to Raquel and she does not have much information about them. Their true intentions are totally unknown to lender Raquel.Therefore, it is quite impossible for Raquel to distinguish who might be the defaulter. Can you write down the name of this problem? Is there any possible solution to find out the right person? How?
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