Money demand in an economy in which no interest is   paid on money is   Md   p == 500 + 0.2Y - 1000i.   a. Suppose that P = 100, Y = 1000, and i = 0.10. Find   real money demand, nominal money demand, and   velocity.   b. The price level doubles from P = 100 to P = 200.   Find real money demand, nominal money   demand, and velocity.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Money demand in an economy in which no interest is

 

paid on money is

 

Md

 

p == 500 + 0.2Y - 1000i.

 

a. Suppose that P = 100, Y = 1000, and i = 0.10. Find

 

real money demand, nominal money demand, and

 

velocity.

 

b. The price level doubles from P = 100 to P = 200.

 

Find real money demand, nominal money

 

demand, and velocity.

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