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Suppose a country has a money demand function (M/P)d = kY, where k is a constant parameter. The money supply grows by 12% per year, and real income grows by 4 percent per year.
a. What is the average inflation rate?
b. How would inflation be different if real income growth were higher? Explain.
c. Suppose, instead of a constant money demand function, the velocity of money in this economy was growing steadily because of financial innovation. How would that affect the inflation rate? Explain
A firm produces 20 units of output at a market price of #5, a marginal cost of $5, and an average cost of $3.what is the firms economic profit.
Article may originate from the internet however please provide the link to the particular article you are reviewing.
This questions is based on the article, "Signs of a slowdown," published by The Economist on June 6, 2015. The article discusses
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