Assume that the demand for real money balances is given by the equation M/P = 0.6Y-100i, where Y output and i is the nominal interest rate (in percent). (a) If Y is 1,000, M is 100, and i is 4 percent, what must P be? (b) If i is 4 percent and the expected price level percent change (inflation) is 1 percent, what is the real interest rate? (c) Using the information above, graph the monetary market

Assume that the demand for real money balances is given by the equation M/P = 0.6Y-100i, where Y output and i is the nominal interest rate (in percent). (a) If Y is 1,000, M is 100, and i is 4 percent, what must P be? (b) If i is 4 percent and the expected price level percent change (inflation) is 1 percent, what is the real interest rate? (c) Using the information above, graph the monetary market

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter16: Monetary Policy

Section: Chapter Questions

Problem 1SQP

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