Explanation Given Information: The interest is to remain constant while real income grows 5 % per year and the price level rises at 5 % per year. GRE Economic Test: M d = 2 × y 0.6 × r − 0.3 × p Where, M d = for nominal money balances ( money stock ) y = real income r = an index of interest rates p = an index of prices percentage rate of growth of M = Rate of growth of M M = d M / d t M Formula used: Derivative of function f ( x ) = ( u ) n using chain rule is f ' ( x ) = d d x ( u ) n = n u n − 1 d u d x , where u is the function of x . Calculation: Consider the function, M d = 2 × y 0.6 × r − 0

Student Solutions Manual for Waner/Costenoble's Finite Math and Applied Calculus, 7th

7th Edition

ISBN: 9781337275972

Author: Waner, Stefan; Costenoble, Steven

Publisher: Cengage Learning

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Chapter 11.4, Problem 99E

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To calculate: The percent per year so that the money stock must grow if the interest is to remain constant while real income grows 5% per year and the price level rises at 5% per year, and the demand function for money is Md=2×y0.6×r−0.3×p.

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Chapter 11.4, Problem 98E

Chapter 11.4, Problem 100E

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The percent per year so that the money stock must grow if the interest is to remain constant while real income grows 5 % per year and the price level rises at 5 % per year, and the demand function for money is M d = 2 × y 0.6 × r − 0.3 × p .

Solution Summary: The author calculates the percent per year the money stock must grow if the interest is to remain constant while real income grows 5% and the price level rises.

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To calculate: The percent per year so that the money stock must grow if the interest is to remain constant while real income grows 5% per year and the price level rises at 5% per year, and the demand function for money is Md=2×y0.6×r−0.3×p.

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Chapter 11 Solutions