What is the average inflation rate

Assignment Help Business Economics

Reference no: EM1320773

Q. Assume a country has a money demand function (M/P)d = kY, where k is a constant parameter. The money supply grows by 12% every year also real income grows by 4% every year.

(a) Illustrate what is the average inflation rate?

(b) Elucidate how would inflation be different if real income growth were higher, say 6%? Explain.

(c) Assume, instead of a constant money demand function, the velocity of money in this economy was growing steadily, say by 2% every annum since of financial innovation. Elucidate how would that affect the inflation rate? Explain.

Reference no: EM1320773

Questions Cloud

Determining the i/o access speed : Determine the I/O access speed utilizing the CPU 3 and each of the hour disk drives as they evaluate the following track requests: 0, 31, 20, 15, 20, 31, 15.

Case study of masters corp : Masters Corp. has two bonds with 20-years remaining until maturity. Both bonds are unsecured and are callable at $1,050. Bond A was issued 20 years ago with a coupon rate of 6%. Bond B was issued 10 years ago with a coupon rate of 8%.

Confidence the difference in the level of satisfaction : Estimate with 90% confidence the difference in the level of satisfaction with service between the two branches.

Computing critical value and test statistic : Data is given in the table below. Process data as illustrate in the paper on the Mann-Whitney U test. Critical Value:Test Statistic (Show procedure.)Z .

What is the average inflation rate : Illustrate what is the average inflation rate. Elucidate how would that affect the inflation rate.

Resource constrained : How does the new duration compare with the estimated completion date generated from Part 1? What does this tell you about the impact resources can have on a schedule?

Probability that exactly one of sample individuals carries : Probability that exactly one of the sample individuals carries the gene.

Program to calculate area and perimeter of rectangle : Write down a program which asks for length L and the width W of a rectangle, then the computer perimeter and area of rectangle.

Level of satisfaction with service : At the 5% level of significance, can we infer that the difference in the level of satisfaction with service between the two branches is wider than 5 p.c. points?

User Account

All Pages