ee is $4. 1. The money supply per person is $2000. What is the value of the nominal interest rate? Why? p. Now suppose the Fed wants to reduce the nominal interest rate to 1% (.01). What will they need to do to the money supply- by how much and in what direction must it be changed? c. The Fed wants to maintain the interest rate at 1% despite what they expect will be a 5% increas in real income. By how much, in what direction, and by what percent should the money supply be changed? (Before the change, the money supply is at the level you found in part b. above). d Instrad of real income sunnose the Fed expects the price level to increase by 5%. To maintain

ee is $4. 1. The money supply per person is $2000. What is the value of the nominal interest rate? Why? p. Now suppose the Fed wants to reduce the nominal interest rate to 1% (.01). What will they need to do to the money supply- by how much and in what direction must it be changed? c. The Fed wants to maintain the interest rate at 1% despite what they expect will be a 5% increas in real income. By how much, in what direction, and by what percent should the money supply be changed? (Before the change, the money supply is at the level you found in part b. above). d Instrad of real income sunnose the Fed expects the price level to increase by 5%. To maintain

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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