I need help with number 1 under problems and applications 1. Write the...
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I need help with number 1 under problems and applications
1. Write the quantity equation and explain it. 2. What does the assumption of constant velocity 5, List all t and ran think th imply? 6. Explain 3. Who pays the inflation tax? 4. If inflation rises from 6 to 8 percent, what hap- in caus 7. Define and gi pens to real and nominal interest rates according to the Fisher effect? PROBLEMS AND APPLICATION d. Su of be 1. LounchPod In the country of Wiknam, the velocity of money is constant. Real GDP grows by 3 percent per year, the money stock grows by 8 percent per year, and the nominal interest rate is 9 percent. What is a. the growth rate of nominal GDP? b. the inflation rate? c. the real interest rate? to ir f. I 2. Suppose a country has a money demand function (M/P) kY, where k is a constant parameter. The money supply grows by 12 percent per year, and real income grows by 4 percent per year. a. What is the average inflation rate? g- b. How would inflation be different if real 4. S th income growth were higher? Explain. c. How do you interpret the parameter k? What is its relationship to the velocity of money
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