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Solve for the nominal interest rate

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In this problem, we are going to use the money market to model two real world events: i) a portfolio shock to money demand and ii) a shock to the money multiplier. Suppose you have the following information: Original money demand function: Md = P X [ 200 + .5 Y - 200 i] where P = 1 (P remains constant in this problem), Y = 1600, Ms = 600, MB = 400 MM=1.5

a) Solve for the nominal interest rate ( i ) that clears the money market.

Reference no: EM132444905

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