b.Suppose a country has a money demand function (M/P)d= kỲ, where k is a constant parameter. Themoney supply grows by 12 percent per year, and real income grows by 4 percent per year. What isthe average inflation rate?

Inflation refers to the rise in the general price level over a considerable period. Inflation…

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the average inflation rate?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Inflation

Section: Chapter Questions

Problem 7SQP

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b.
Suppose a country has a money demand function (M/P)d= kỲ, where k is a constant parameter. The
money supply grows by 12 percent per year, and real income grows by 4 percent per year. What is
the average inflation rate?

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