After Grand Nagus Zek hands the throne to Rom to be head of the Ferengi Alliance, Rom decides that a more prudent move would be to switch from a commidity based currency (gold pressed latinum) to the Oo-Max, which is a fiat currency. He sets the initial money supply at 2 trillion Oo-Max, and to ensure some degree of monetary stability, wants to let the Ferengi Central Bank aim for a target growth rate of 2% per year. He wants to let the money growth over time subject to the following money supply function Mt = M0eµt where Mt is the money supply after t years, M0 is the initial stock of money, ex is the exponential function, µ is the growth rate of money, and t is the number of years after the initial stock of money is set. (b) what is the money supply after 8 years (c)Suppose in the 9th year, the Ferengi Alliance runs into an inflation problem, and they can’t keep it under control. Money growth rises from 2% to 10%. What is the money stock two years after the value you get in part (b) of this question (d)Suppose in the 12th year, the Ferengi Alliance gets money growth rates under control, and cuts money growth to 1%. What is the money stock?
After Grand Nagus Zek hands the throne to Rom to be head of the Ferengi
Alliance, Rom decides that a more prudent move would be to switch from a commidity based currency (gold pressed latinum) to the Oo-Max, which is a fiat currency. He sets the initial money supply at 2 trillion Oo-Max, and to ensure some degree of monetary stability, wants to let the Ferengi Central Bank aim for a target growth rate of 2% per year. He wants to let the money growth over time subject to the following money supply function
Mt = M0eµt
where Mt is the money supply after t years, M0 is the initial stock of money, ex is the exponential function, µ is the growth rate of money, and t is the number of years after the initial stock of money is set.
(b) what is the money supply after 8 years
(c)Suppose in the 9th year, the Ferengi Alliance runs into an inflation problem, and they can’t keep it under control. Money growth rises from 2% to 10%. What is the money stock two years after the value you get in part (b) of this question
(d)Suppose in the 12th year, the Ferengi Alliance gets money growth rates
under control, and cuts money growth to 1%. What is the money stock?
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