4. Suppose that the money demand function takes the form (M/P)d=L(i,Y)=Y/(5i). a. If output grows...
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4. Suppose that the money demand function takes the form (M/P)d=L(i,Y)=Y/(5i). a. If output grows at rate g and the nominal interest rate is constant, at what rate will the demand for real balances grow? b. What is the velocity of money in this economy? c. If inflation and nominal interest rates are constant, at what rate, if any, will velocity grow
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