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Money supply growth rate

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Assume that the quantity theory of money and relative PPP both hold. Output growth is 3% in the U.S. and 2% in Mexico, while money supply growth is 7% in the U.S. Money demand is constant in both countries. What money supply growth rate should Mexico choose if it wishes to fix the value of its currency to the U.S. dollar?

Reference no: EM133125632

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