Consider an economy with a constant nominal money supply, a constant level of real outout Y= 400, and a constant real interest rate r 10%. Suppose that the income elasticity ofmoney demand is 1.20 and the interest elasticity of money demand is-0.10.a. By what percentage does the equilibrium price level differ from its initial value if output increases to Y 480.00 (and rremaine at 10%)?%AP=(enter your result as a percentage rounded to two decimal places).b. By what percentage does the equilibrium price level differ from its initial value if the real interest increases to r-12.50% (and Y remaina at 400)?%AP (enter your result as a percentage rounded to two decimal placea).c. Suppose that the real interest rate inoreases to re 12.50%. By what percentage would real output have to increase for the equilibrium price level to remain at its initial value?%AY- T(enter your reault an a percentage rounded to two decimal places)

In the macroeconomic model of IS-LM, the LM curve establishes a relation between the national income…

Consider an economy with a constant nominal money supply. a constant level of real output Y 400, and a constant real interest rater 10%. Suppose money demand is 1.20 and the interest elasticity of money demand is -0.10. a By what percentage does the equilibrium price level difer trom its intial value if output increases to Y 480.00 (and rremaine at 10N? SAP- P-(enter your reault as a percentage rounded to hwo decimal placea) b. By what percentage does the equilbrium price level differ from its initial value if the real interest increases to r12.50% (and Y remaina at 400y? SAP (enter your reault asa peroentage rounded to hwo decimal placea) e. Suppose that the real interest rate inoreases to r12.50% By what percentage would real output have to increase for the equlibrium price level to remain at its intial value? teg deomal placea)

Consider an economy with a constant nominal money supply. a constant level of real output Y 400, and a constant real interest rater 10%. Suppose money demand is 1.20 and the interest elasticity of money demand is -0.10. a By what percentage does the equilibrium price level difer trom its intial value if output increases to Y 480.00 (and rremaine at 10N? SAP- P-(enter your reault as a percentage rounded to hwo decimal placea) b. By what percentage does the equilbrium price level differ from its initial value if the real interest increases to r12.50% (and Y remaina at 400y? SAP (enter your reault asa peroentage rounded to hwo decimal placea) e. Suppose that the real interest rate inoreases to r12.50% By what percentage would real output have to increase for the equlibrium price level to remain at its intial value? teg deomal placea)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Money Growth And Inflation

Section: Chapter Questions

Problem 1PA

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