Japan's money supply is growing rapidly at a 5.54% while real GDP is increasing at 8.29%. Japan's real interest rate is also growing at 4.46%. *we are assuming Quantity Theory of Money, Classical Dihotomy, and Fisher Effect effect are true. a. calculate the inflation rate b. calculate nominal interest rate c. calculate GDP growth rate
Japan's money supply is growing rapidly at a 5.54% while real
*we are assuming Quantity Theory of Money, Classical Dihotomy, and Fisher Effect effect are true.
a. calculate the inflation rate
b. calculate nominal interest rate
c. calculate GDP growth rate
The term "inflation rate" is defined as a rise in the economy's general price level. The nominal interest rate can be any declared rate of interest. On the other hand, the real interest rate is that interest rate adjusted for the inflation rate.
According to the quantity theory of money, every increase in the quantity of money will produce a proportional increase in the price level. Japan's money supply is growing rapidly at 5.54%. It implies that the inflation rate is 5.54%.
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