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Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509
BuyFind

Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509

Solutions

Chapter
Section
Chapter 17, Problem 3PA
Textbook Problem
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It is sometimes suggested that the Federal Reserve should try to achieve zero inflation. If we assume that velocity is constant, does this zero-inflation goal require that the rate of money growth equal zero? If yes, explain why. If no, explain what the rate of money growth should equal.

Expert Solution
To determine
Zero inflation and rate of money growth.

Explanation of Solution

By the quantity theory of money, achieving zero inflation rate would require the growth rate of quantity of money to be equal to the growth rate of output, as

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Chapter 17 Solutions

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