The growth in the velocity of M2 has been steady at about 2% since 1950 so we figure it will stay about there for the foreseeable future. Inflation will probably be 5%. We would like the rate of growth of real output to be 4% over the next year. How fast should we let M2 grow?

The growth in the velocity of M2 has been steady at about 2% since 1950 so we figure it will stay about there for the foreseeable future. Inflation will probably be 5%. We would like the rate of growth of real output to be 4% over the next year. How fast should we let M2 grow?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter15: The Debate Over Monetary And Fiscal Policy

Section: Chapter Questions

Problem 1DQ

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