Illustrate percentage does equilibrium cost level differ

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Q. Consider an economy with a constant nominal money supply, a constant level of real output Y = 100 and a constant real interest rate r = 0.10. Assume that income elasticity of money demand is 0.5 and interest elasticity of money demand is -0.1.

By Illustrate what percentage does equilibrium cost level differ from its initial value if output increases to Y = 106 (and r remains at 0.10)?

Reference no: EM1367544

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