Assume that money demand takes the following form. M = y [ 1 = (x + m ² ) ] where y = 1,000 and r=0.1 (a) Assume that, in the short even, Te is constant and Calculate the amount of seignorage if rate of money growth, AM/M, equals : - equal to 25.1. the
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![Assume
that money demand takes the following form : -
M = y [ 1 = (x + m ² ) ]
where y = 1,000 and
r = 0.1
(a) Assume that in the short even, te is constant and
equal to 25.1.. Calculate the amount of seignorage if
the
rate of money growth, AM/M, equals :-
ii) 50%.
(1) 75.10
i) 25.1.
1 on the meduim run, n² = π = AM/M. Compute the amount
of signorage associated with the three rates of money
growth
in part (a). Explain why the answers differ from
those in (a).
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