Asked by Sally
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. Suppose that the income elasticity of demand is 0.5 and the interest elasticity of money demand is –0.1.
By what percentage does the equilibrium price level differ from its initial value if output increases to Y = 106 (and r remains at 0.10).
I don't know where to start.
By what percentage does the equilibrium price level differ from its initial value if output increases to Y = 106 (and r remains at 0.10).
I don't know where to start.
Answers
Answered by
Anonymous
Interest rate increase
There are no AI answers yet. The ability to request AI answers is coming soon!
Submit Your Answer
We prioritize human answers over AI answers.
If you are human, and you can answer this question, please submit your answer.