ii) Monetary policy in a liquidity trap. Suppose the money demand is given by: M = $Y (0.25-i) as long as the interest rates are positive. The questions below then refer to situations where the interest rate is zero. What is the demand for money when interest rates are zero and $Y=80?
ii) Monetary policy in a liquidity trap. Suppose the money demand is given by: M = $Y (0.25-i) as long as the interest rates are positive. The questions below then refer to situations where the interest rate is zero. What is the demand for money when interest rates are zero and $Y=80?
Chapter17: The Trade-off Between Inflation And Unemploy
Section: Chapter Questions
Problem 7DQ
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