Suppose that the real money demand function is: 0.01x Y L(Y,r+ ) = where Yis real output, ris the real interest rate, and s is the expected rate of infation. Real output is constant over time at Y= 250. The real interest rate is fixed in the goods market at r= 12% (0.12) per year. Suppose that the nominal money supply is growing at the rate of 10% (0.10) per year and that this growfth rate is expected to persist forever. Currently, the nominal money supply is M- 200. What is the value of the real money supply?O(ontor your rosponse rounded lo two decimal places) What is the value of the curent price level? (onter your response rounded to two decimal placee).

Suppose that the real money demand function is: 0.01x Y L(Y,r+ ) = where Yis real output, ris the real interest rate, and s is the expected rate of infation. Real output is constant over time at Y= 250. The real interest rate is fixed in the goods market at r= 12% (0.12) per year. Suppose that the nominal money supply is growing at the rate of 10% (0.10) per year and that this growfth rate is expected to persist forever. Currently, the nominal money supply is M- 200. What is the value of the real money supply?O(ontor your rosponse rounded lo two decimal places) What is the value of the curent price level? (onter your response rounded to two decimal placee).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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