The interest rate increases from 10% to 12% and GDP falls from 110 to 100 and money supply is growing by 2% - find the impact on inflation. What growth rate of money is required to have zero inflation. Income elasticity is 0.5 and interest rate elasticity is -0.1 Use the equation delta p/p = delta Ms / Ms – (delta md/md)
The interest rate increases from 10% to 12% and GDP falls from 110 to 100 and money supply is growing by 2% - find the impact on inflation. What growth rate of money is required to have zero inflation. Income elasticity is 0.5 and interest rate elasticity is -0.1 Use the equation delta p/p = delta Ms / Ms – (delta md/md)
Chapter15: Macroeconomic Viewpoints: New Keynesian, Monetarist, And New Classical
Section: Chapter Questions
Problem 6E
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The interest rate increases from 10% to 12% and GDP falls from 110 to 100 and money supply is growing by 2% - find the impact on inflation. What growth rate of money is required to have zero inflation. Income elasticity is 0.5 and interest rate elasticity is -0.1
Use the equation
delta p/p = delta Ms / Ms – (delta md/md)
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